6 Ways to Beat Student Loan Debt
You can beat student loan debt with these helpful tips.
By Kathryn Knight Randolph
April 29, 2016
After college, recent graduates have to face finding a new job, a place to live and a way to reconcile their new salary with the realities of paying for basic living expenses. On top of that, 69% of recent graduates had student loan debt, according to the Project on Student Debt. Furthermore, the average amount of student loan debt per graduate is $28,950.
It sounds pretty grim, but with a few changes to how you live in and out of school as well as some drive and motivation, you can pay those student loans off faster than you think.
1. Live frugally in college and/or graduate school.
When you have “unlimited funds” through student loans, it’s easy to rack up quite a bit of debt. It’s not uncommon for students to use their loans to pay for vacations, an over-the-top apartment and new clothes for any and every occasion. But living like that is a big no-no. Four years’ worth of spending on your student loans could lead to decades of student loan payments. Instead, live frugally in school, stay on budget and don’t use your student loans to pay for experiences and indulgences that you don’t need.
2. Work during school, and find work soon after you graduate.
Not only should you watch your spending during college or graduate school, but you should also work to bring in money. Depending on the type of loan you have, you can opt to pay your student loan interest while you’re in school. With the money you make, you can pay the interest. Additionally, working during college or graduate school increases your chances of getting hired soon after graduation. Rather than making zero payments on your student loans while you search for a job during the grace period, you can be getting a head start on paying your student loan payments.
3. Pay student loans with the highest interest rate first, and make extra payments.
While some theories for paying down debt encourage individuals to pay off the debt with the least amountt, borrowers should focus instead on the highest interest loan. Obviously, borrowers should make minimum payments on all loans each month, but focusing on the loan with the highest interest will save graduates money in the long run. Additionally, make extra payments on your loans to pay them off faster; and again, save money. If you have an unexpected surplus of money, even if it’s just $100, use it on your student loans instead of a new pair of shoes or game system.
5. Supplement your income.
Your starting salary after graduation can seem like the most money you’ve ever had, but you’ll find once it’s time to pay rent, utilities and student loans that your money runs out pretty fast. Some graduates may need to supplement their income with a weekend job or freelance work. It’s not ideal, but if graduates are serious about paying off student debt, it will enable borrowers to make extra payments and pay off debt sooner.
6. Always keep in mind – it’s temporary.
Some of the above can be quite overwhelming, stressful and taxing on a student or recent graduate, but the most important thing to remember is that it’s all temporary. Anyone who has paid off their student debt will tell you that any sacrifice is worth it to know that you’re finally paid in full. And with a few extra hundred — or even thousand — dollars a month, you can finally indulge on those vacations, a better apartment and that pair of shoes or game system.
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