Today, Americans’ collective student loan debt amounts to more than $1.6 trillion – a number that’s spiked 106%.
As a college graduate, it can feel stressful to even think about what you owe to lenders.
That said, you can manage. You won’t become debt-free overnight, but it’s possible to build a plan that tackles your goals.
Here are a few tips on how to pay off your student loan debt quickly.
1. Get Started With a Budget
When you land your first "adult" job, it’s easy to feel like you’re completely comfortable. After all, you may not have ever made so much money before! Still, you’ll need to make a few sacrifices if you want to pay off your debt sooner rather than later. A budget can help you conquer this issue. As a result, you’ll make better financial decisions.
Before you start, you’ll want to explore various budget systems to find one that fits your needs. After you choose a method, it’s smart to plug your data into a virtual tool like Excel. Otherwise, you’ll have to keep track of each expense manually.
2. Refinance Your Student Loan Debt
For some, it makes the most sense to refinance their student loan debt. This process allows you to take your current debt to another lender. This new servicer pays off your debt for you – but you then owe them money for their trouble.
If you have loans with a steep interest rate, it may be the best choice to explore your options. A refinanced loan can help you obtain a new term as well.
You should only refinance if you think you’ll be able to achieve a better interest rate and repayment schedule. This way, you can continue to pay your current amount, which allows you to chip away at your debt much more quickly.
3. Use Your Raises and Refunds
What do you do with your work bonuses? Too often, people put their supplemental income and tax refunds toward a shopping trip. While it’s always nice to treat yourself, it’s even better to use that money for your debt. Whenever you receive some extra cash, take a look at your budget. Do you have any emergencies you need to address? If not, it’s time to make an extra loan payment.
It won’t always be possible to use this money for your debt. Sometimes, life happens. For the most part, though, you should use as much of this extra money as you can to pay off your loans.
4. Make Extra Monthly Payments
If you make additional payments each month, it’s possible to speed up your payment timeline. The system won’t penalize you – whether you want to pay more on the due date or make an extra payment later. That supplemental cash can make a massive difference down the road. Even if you owe $40,000 at a standard 4.5% interest rate, you can pay down that debt sooner.
It’s essential to note that you’ll likely have to contact your lender before you start this process. Often, loan servicers can take that money and apply it to next month’s due date. They could also allocate it toward any interest you may owe. Therefore, it’s best to let them know you plan to make extra payments toward your current principal.
5. Prioritize Specific Lifestyle Changes
It’s true that you’ll need to make a few sacrifices to pay off your debt. These lifestyle changes don’t need to be too significant, but you’ll need to narrow down whatever you think you can live without for a while. It won’t be easy, but you’ll become debt-free much faster.
If you need to move, look for apartments with more than one bedroom so that you can include roommates. You could learn how to cook so that you don’t spend too much on takeout. You may want to cut down on subscription services. You’ll always need to pay for groceries and gas, but do you actually need to buy coffee every morning? As you build your budget, take these expenses into account.
other valuable tips:
6. Look for Autopay Options
Most lenders, federal or private, offer autopay options. This selection isn’t the most impactful for your debt, but it can make a small difference. The U.S. Department of Education allows a 0.25% interest rate discount when borrowers sign up for autopay. This effort can provide two advantages. One, you’ll be able to save a few hundred dollars total – and every penny counts. Two, you won’t have to remember to pay your loans on time.
While autopay isn’t a super lucrative possibility, it still counts toward your goal. You can also look around for other discounts that your private lenders may provide. You never know what you’ll find unless you do some research. If you combine this step with others, you’ll notice a difference.
Try These Tips to Tackle Your Student Loan Debt
Your student loan debt may seem like an uphill battle. Fortunately, it’s not! You can manage your debt with these suggestions. Soon enough, you’ll be one step closer to a debt-free life.
Image Credit: paying off student loan debt by twenty20.com
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