Young adults today graduate college with a lot of student loan debt. The average student from the class of 2016 graduated with $37,172 in student loans! And these loans can make anything from buying a home to starting a family next to impossible. How can today’s grads dig their way out of this Mt. Everest-sized debt?
While paying down student loans takes a lot of hard work, nothing beats the feeling of achieving freedom from owing money. I paid my student loans down fast, and you could too. Take a look at the following tips based on the real-life experience of yours truly!
1. Make An Extra Payment
Enjoying one of those three-paycheck months? Make an extra payment toward your student loans with that cash.
If at all possible, consider making student loan payments twice per month instead of just once. If your budget allows for this, you’ll save a ton on interest by paying your loans off twice as quickly. Or make micropayments multiple times a month, particularly if you get paid every two weeks, to align your debt payments with when you receive your paycheck!
2. Pay A Little More
Unless your budget is so tight that you literally have not a penny left to your name after monthly bills, you can afford to pay a little more towards your student loan each month, even if it’s only $5. Always tack on a bit extra each time you log in and pay. Vow to always pay at least $1 extra, but pay more as often as you can to watch the balance drop more quickly.
3. Use Your Annual Bonus
Consider your tax refund and your yearly bonus as tools for debt freedom. Yes, travel benefits everyone, and we all need a break sometimes, but blowing the whole wad on a theme park excursion will leave you with the same debt-to-income ratio (and that’s assuming you didn’t bust out the credit cards on your trip).
Go ahead and treat yourself to a reward like a nice dinner out with a bit of the money, but use the rest toward loan repayment. Don’t mourn using your windfall for such a practical cause — think of it as an investment that will hopefully prevent headaches further down the line.
4. Find The Right Employer
While they’re decidedly more difficult to find in today’s economy, some employers do offer loan repayment as an employee perk. Some of these companies contribute as much as $5,000 per year toward student loan repayments!
To increase your chances of landing a job with a full benefits package, you may want to aim for bigger companies when sending out applications. Many companies unfortunately can’t afford to offer pricey perks, but companies like Intel, which has existed for nearly forever, routinely offer such bennies.
5. Refinance Right
If you haven’t yet consolidated and/or refinanced your student loans, what are you waiting for? Consolidation means bringing student loans with various interest rates under one rate umbrella. Refinancing can help you pay down debt faster by lowering interest rates, especially for those with good credit.
Even those with less-than-perfect credit can still lower their rates, so don’t write off refinancing until you’ve tried. When interest rates drop by even a fraction of a percent, the result is less money to repay in the long run.
6. Get A Side Hustle
Do you adore baking? Why not take on a side gig as a cake baker or decorator at the grocery just down the road? Enjoy driving to relax? Why not sign up to drive for Uber, Lyft or DoorDash?
Side hustles can help you pay down your student debt by creating a new income stream. And getting a side hustle doesn’t have to mean pulling on a hair net and asking customers if they want fries with that—although it can if you want it to!
Find something that you love and build your side hustle from that to make it more like fun than yet another work obligation. Me, I started freelance writing straight out of college, which can pay off enormously when strategized well! If you’ve always been a gym rat, consider getting certified as a trainer or group fitness instructor. If you adore animals, start your own pet-sitting biz or partner with a provider search engine like Care.com.
7. Live Like An Undergrad
Unless you’re woefully underpaid, chances are simple changes could leave you with enough extra each month to pay down your loans faster. Do you really need to stop at Starbucks every single morning for a latte when you could brew a pot at home for a fraction of the cost? Do you absolutely have to have a genuine Prada handbag when one from Target could serve the same purpose?
No one says you have to eat ramen every single day like you did when you were younger. But do reflect on how little you lived on income-wise back then and try to cut your present expenses accordingly. Remember, I’m not saying you can never outfit yourself head-to-toe in Coco Chanel’s creations—just try to remain mindful until you remove the student loan debt off your back!
Breaking Free From Student Loans
Many college graduates today face an enormous burden of student loan debt, which is truly unfortunate. But with a bit of ingenuity and creativity, you can work your way toward paying it off faster and enjoying greater financial freedom as a result.