Does the debt from your college days seem overwhelming? You're not alone: Student loans in the U.S. total more than $1.5 trillion. That's second only to the size of the nation's mortgage debt.

Ironically, the burden of student loans is making it harder for college graduates to buy a home. Politicians are debating what to do about the problem, but in the meantime, individual Americans can't wait around for them to work it out.

Developing a plan to manage your student loans is critical to your long-term financial health. We explore 10 steps to help you get control. 

1. Calculate Your Total Debt

As with any type of debt situation, you need first of all to understand how much you owe overall. Students usually graduate with numerous loans, both federally sponsored and private, having arranged for new financing each year they were in school. So buckle down and do the math: Only by knowing your total debt can you develop a plan to pay it down, consolidate it or possibly explore forgiveness.

2. Know the Terms

As you sum up the size of your debt, also itemize the terms of every loan. Each one could have different interest rates and different repayment rules. You'll need this info to develop a payback plan that avoids extra interest, fees, and penalties. 

The Department of Education also has an online website to help students find their best repayment plans.

3. Review the Grace Periods

As you pull together the specifics, you will notice that each loan has a grace period (the amount of time you have after graduation to start paying your loans back). These too can differ. For example, Stafford loans have a six-month grace period, while Perkins loans give you nine months before you have to start making payments. 

To provide economic relief from the COVID-19 pandemic, the U.S. government has suspended all payments and interest on federal student loans until Sept. 30, 2021.

4. Consider Consolidation

Once you have the details, you may want to look at the option of consolidating all your loans. The big plus of consolidation is that, often, it it reduces the burden of your monthly payments. It also frequently lengthens your payoff period, which is a mixed blessing: more time to pay the debt, but more interest payments, too.

What's more, the interest rate on the consolidated loan may be higher than those on some of your current loans. Be sure to compare loan terms before you sign up for consolidation. 

Also, if you consolidate, you will lose your right to the deferment options and income-based repayment plans (see below) that are attached to some federal loans.

5. Hit Higher Loans First

As with any debt-payoff strategy, it is always best to pay off the loans with the highest interest rates first. One common scheme is to budget a certain amount above the total monthly required payments, then allocate the overage to the debt with the biggest interest bite.

Once that is paid off, apply the total monthly amount on that loan (the regular payment, plus the overage plus the regular amount) to repaying the debt with the second-highest interest rate. And so on. This is a version of the technique known as a debt avalanche.

For example, suppose you owe $300 per month in student loans. Of that, a $100 payment is due to a loan with a 4% rate, $100 is due to a loan with a 5% rate and $100 is due to a loan with a 6% rate. One would plan the budget with $350 toward student loan payoff every month, applying the extra $50 to the 6% loan.

When that the 6% loan is paid off, the $150 used to pay the 6% debt each month would then be added to the $100 being used to pay the 5%, thus paying $250 each month for the loan with a 5% rate and speeding up that payoff. Once that is paid off, then the final loan at 4% would be paid at the rate of $350 per month until all student debt is paid in full.

6. Pay Down Principal

Another common debt payoff strategy is to pay extra principal whenever you can. The faster you reduce the principal, the less interest you will pay over the life of the loan. Since interest is calculated based on the principal each month, less principal translates to a lower interest payment. For more techniques, see Earn Credit Rewards Paying for Student Loans.

7. Pay Automatically

Some student-loan lenders offer a discount on the interest rate if you agree to set up your payments to be automatically withdrawn from your checking account each month. Participants in the Federal Direct Student Loan Program get this sort of break (only .25%, but hey, it adds up), for example, and private lenders may offer discounts as well. 

8. Explore Alternative Plans

If you have a federal student loan, you may be able to call your loan servicer and work out an alternative repayment plan. Options include:

  • Graduated repayment: Increases your monthly payments every two years over the ten-year life of the loan. This plan allows for low payments early on, accommodating entry-level salaries and assuming you will get raises, or move on to better-paying jobs, as the decade progresses.
  • Extended repayment: Allows you to stretch out your loan over a longer period of time, such as 25 years rather than ten years, which will result in a lower monthly payment.
  • Income contingent repayment: Calculates payments based on your adjusted gross income (AGI) at no more than 20% of your income for up to 25 years. At the end of 25 years, any balance on your debt will be forgiven.
  • Pay as you earn: Caps monthly payments at 10% of your monthly income for up to 20 years, if you can prove financial hardship. The criteria can be tough, but once you’ve qualified, you may continue to make payments under the plan even if you no longer have the hardship.

While these plans and other repayment options may well lower your monthly payments, bear in mind that they may mean you'll be paying interest for a longer period, too. They also aren't applicable to any private student loans you took out.

9. Defer Payments

If you are not yet employed, you can ask your student loan lender to defer payments. If you have a federal student loan and you qualify for deferment, the federal government may pay your interest during the approved deferment period. If you don’t qualify for deferment, you may be able to ask your lender for forbearance, which allows you to temporarily stop paying the loan for a certain period of time. With forbearance, any interest due during the forbearance period will be added to the principal of the loan. 

10. Explore Loan Forgiveness

In some extreme circumstances, you may be able to apply for debt forgiveness or cancelation or discharge of your student loan. You could be eligible if your school closed before you finished your degree, you become totally and permanently disabled, or paying the debt will lead to bankruptcy (which is rare).

Less drastic, but more specific: You have been working as a teacher or in another public service profession.

Note that the American Rescue Plan, President Biden's stimulus package addressing the COVID-19 pandemic, includes a provision that makes all student loan forgiveness from January 1, 2021, to December 31, 2025, tax-free.

The Bottom Line

Not all these tips may bear fruit for you. But there's really only a bad option if you are having difficulty paying your student loans: to do nothing and hope for the best. Your debt problem won't go away, but your creditworthiness will.