Are you buried in student loan debt? Afraid you’ll be paying off multiple loans for the next 25 to 30 years? Don’t worry – you’re not alone.
An estimated 42 million Americans of all ages bear $1.3 trillion in student loan debt at the moment, according to Consumer Reports, an astronomical amount that’s drawn the attention of U.S. policymakers.
The average student loan debt burden today is more than $37,000 and student loan debt is the second-largest debt category in the U.S., behind only mortgage debt.
Economists and candidates for the Democratic presidential nomination are floating ideas about widespread student loan debt forgiveness.
You could wait on policymakers, but your best bet is to grab the bull by the horns and climb out of debt yourself. With a little hard work, perseverance, and elbow grease, wiping out student loan debt is possible.
Pay More Each Month
One of the most effective ways to pay off student debt faster is to pay more than the minimum monthly balance. If you simply pay the minimum balance every month, you’re not attacking the principal of the loans because of the interest rates attached to the debt.
Just remember that student loan servicers may apply that extra payment to next month’s bill, which won’t help pay off the loan faster. Let the servicer know you want that extra money to apply to the current month’s balance.
This seems obvious. But what if you don’t have the extra income to throw at your student loan payments? That leads us to our next tips …
Find the Extra Money
Like any good financial advice, gaining control of your money starts with creating a monthly budget. A budget will tell you exactly where your money is going and where you can cut back.
When you do cut back on some spending, take a portion of that money and allocate it toward you student loan payments. Simple as that.
Look at your spending and see if there are any “luxuries” that you can cut back on, such as that daily Starbucks coffee, your Hulu subscription, or maybe even that massage and spa membership.
Another tip: Whenever you get your tax refund or a raise at your full-time job, put that money toward student loan payments (or at least a portion of it).
Get a ‘Side Hustle’
Cutting out spending is one thing. But there are also ways to increase your monthly income to help pay off student loans.
Get a part-time job or a “side hustle.” There are any number of things you could do, from driving Uber to delivering pizzas.
Just like the money trimmed from your budget, take a portion of your side hustle money and throw that at student loan payments. You’d be surprised how a little extra dough from both of these strategies can add up.
Use the ‘Snowball’ Method
So far, we’ve talked about ways to trim budgets and increase income to put toward payments. This tip from financial self-help guru Dave Ramsey is more of a strategic way to attack student loan payments.
In the “debt snowball method,” Ramsey advises listing all your loan debts from the smallest to largest balance and paying off the smallest balances first. Take all of that extra money you’re finding and put it towards increasing the monthly payment on the smallest balance, while still making minimum payments on the rest of your loans.
After you’ve paid off the smallest loan debt, simply move on to the next smallest balance and keep repeating the process.
Paying off your loans this way helps you gain momentum as you see the progress snowball and each loan disappears.
Look into Refinancing
Refinancing student loans is an effective way to lower interest rates and pay off student loans faster, if you’re able to do it.
The process basically replaces multiple student loans into a single private loan with a lower interest rate. There’s also the possibility that you can choose a shorter loan term than the one that you originally had.
Refinancing your loans will lead to a bigger monthly payment, but it’ll help you pay off the loan faster and save money on interest. The other bonus is that you’ll have just one loan to pay, instead of several.
You may be a candidate for re-financing if you have a credit score in the high 600s, a steady job with a solid income, and a history of on-time payments.
Watch Debt Disappear
Paying off student loans isn’t easy and it will require some financial and lifestyle sacrifices. Remember that any sacrifices you make will be temporary, and remind yourself what it’ll be like to not have that Sallie Mae letter or email arrive every month.
Hopefully, U.S. politicians and policymakers will reform the student loan industry in the coming years, making it less burdensome for students and the large swath of Americans carrying such enormous amounts of debt.
In the meantime, use the tips we suggested to double down and watch your student loan debt slowly, but surely, disappear.
About the Author:
Maria Gold is a Content Manager/Writer for Empire Resume. She is dedicated to helping educate and motivate people with the latest career articles and job search advice. Her interests range from writing to programming and design. She is also passionate about innovation, entrepreneurship, and technology.