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Student Loans: Tips To Paying Debt Back With Ease

NEW YORK (CBS) ― Call it "Money 101" -- if you can't afford the cost of tuition, apply for a student loan. But after graduation, many are unprepared to write a check to pay back the debt. So, before you flunk out, CBS 2's Kirstin Cole found some helpful tips to slash those student loans.

"I thought because I got a job right away, out of college, that I'd be done paying it in five years," said Sean O'Connell. The 34-year-old father of two says he's sick of paying the student loan piper. Now 13 years later, he's still paying off a $12,000 private loan that came with a high interest rate and now, an even higher price. "It's money that I could be putting away for my two boys to go to school," he said.

Lynnette Khalfani is the author of Zero Debt for College Grads. "The reality is that the student loan crisis is affecting millions of Americans in their 30's, 40's, well into their 50's," Khalfani said.

The financial author of Zero Debt for College Grads says slashing student loans is not a hard lesson to learn.

First: Ask and you may receive. "If I make good grades, if I make all my payments on time, if I get set up on an automatic payment plan, will you lower my interest rate," said Khalfani. That question, she says, can get lenders to shave 1 to 1 1/2 percent off the loan.

Second: Suggest that your employer pay off your student loan. The federal government pays back $10,000 a year, up to a max of $60,000, of each of their employees' student loans. And so will many private companies. "Employers will be more than willing to do this because they want to hire and retain top talent," said Khalfani.

And here's one of the best kept secrets of all, our third tip: Restructure your federal loan payment. Apply for and file a "Statement of Financial Status." Disclose all your other monthly bills and set up a new payment plan, where you can fork over as little as $5 a month. "There is absolutely no reason to default on your loan in this day and age because there are so many options open to you," said Khalfani.

If you have a child getting ready to head off to college, private lenders make it real easy to obtain a loan but at rates up to five times higher. So, Khalfani suggests you take the time to apply for a government loan. The process is more arduous, but the feds will actually pay off the interest on the loan while the student is still in school.

The following are more tips from Lynette Khalfani's book:

-Don't take on more debt than you can handle: To gauge this, a 2 to 1 ratio is prudent. So, for example, if you're going to make $30,000, you don't want more than $60,000 in student loans.

-Reassess how much you owe: The National Student Loan Data System can give you an itemized list of all the federal loans you took out and their amounts so you can re-evaluate what you owe.

-Have payments automatically deducted from your bank account to ensure paying on time.

-If you do pay on time, no late payments for two to four years will often help qualify you for a lower interest rate.

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