Paying off student loans isn’t as easy as some of the more privileged bloggers try to make it seem.
Everyone isn't in the position to be taken care of by parents while they slowing transition into adulthood.
But the last thing you want is for your loans to go into default, so being proactive and seeing repaying your loans as a challenge is the right attitude to go into this with. While not everyone can relate to the stresses of having to pay off loans when there’s rich relatives that can save them, it’s important to know that you have options regardless of your situation.
With the rising cost of college tuition, more Americans are burdened with student debt than ever before. Collectively, the country owes over $1.4 trillion in student loan debt, spread out among approximately 44 million individuals. Which is about $620 billion more than the total U.S. credit card debt. The class of 2017 has an average debt about 6% more than the class of 2016 graduates who has around $37,172 in loans to repay.
Six ways college graduates can repay student loans faster
Rehabilitate your loans - If you're loans are in default it may be a good idea to enroll in a student loan rehabilitation program. Each program is different but for the most part they allow you to make nine payments over 10 months. They can also allow you to use an income-based repayment plan, so you only pay what you can afford to pay.
Create a budget – Make a plan and stick to it! You're more likely to do things when you write them down. Flex those excel muscles and create a spreadsheet for all of your expenses and make a budget for it. Decide that you won't spend more than $150 on groceries or $20 on entertainment in a month. Once you can see all that you'll need to spend, you'll also know how much you can save and out towards your loans.
Have an emergency fund – Life happens. Even as you're repaying your debt be sure to set money aside each pay day for your emergency fund. Ideally, this is usually enough to cover 3-6 months of expenses. But if you suddenly need to dip into your fund to cover unexpected car trouble for example, this comes in handy as well. The trick is never having to use more of your paycheck to find your living expenses.
Get a part-time job – Increasing your income is another great way to get rid of student loans quicker. It'll be hard to leave your professional 9-5 job and go to another for the night but worth it.
Move to a new city – This is an expensive trick, but it can make a difference in the long run. If you live in a city where the cost of living is high such as NYC, Boston or San Francisco, moving across the country might be the right move. Cut your living expenses and save in taxes by movzing to a small town or another major city that doesn't cost a furtive to live in.
Refinance to a lower interest rate – This is where your credit score becomes important. If you have decent credit (not perfect), you may be able to qualify for student loan refinancing. Once your loans are held at an interest rate of 1-2% less, they will be much more manageable.
What are some tricks that helped you pay off your student loans?