According to Student Loan Hero the average American student graduates with over $36,000 in student loan debt creating a total of $1.4 Trillion in student loans. Planning ahead for college and selecting a college you can afford is key, but if you already have student debt building a plan to pay it off quickly is important as you start to build your financial future.
Understand Your Goal
Most students have several different student loans that make up one big number. Gather detailed information for each loan including the amount, type of loan (federal vs. private), payback term and interest rate. Calculate the minimum monthly payment for all the loans and look at your budget to determine if you can pay extra.
Research debt forgiveness programs or loan repayment programs with your employer. Also determine what order you will repay the loans back in, are you going to pay the lowest balance first or are you going to tackle the loan with the highest interest rate? The important thing is to make a plan and set a monthly amount to pay on the principal monthly.
Creative Solutions to Pay Down Student Debt
Securing your first job in your desired field is critical to long term success, but it’s not always enough to tackle the student debt. Creating extra income or drastically reducing expenses is the key to boosting your income. Here are some ways to make extra money to pay down your student debt:
- Live With Your Parents – Never popular, but living with your parents is a great way to reduce your living expenses for a short period to pay down debt. Discuss clear expectations with your parents and set a date to move out as part of your plan.
- Take on an Extra Job – With technology taking on a side job can be virtual and potentially help you build out a professional portfolio. Consider sites like Fiverr and Upwork for professional gigs or things like Uber or Task Rabbit for easy quick and easy jobs.
- Seek a Job with Loan Repayment – Consider a public service program with loan repayment. Teachers and doctors may qualify for loan repayment if they work in a low performing area.
Continue the conversation with us at our podcast where we talk to Adam Carroll the Founder of National Financial Educators.