Trying to pay off your student loans faster? You’re not alone.
In 2018, the total level of student loan debt in the United States sits at around $1.5 trillion.
That’s an all-time high.
And, thanks to a constant stream of new debtors and compound interest, the number keeps climbing to the tune of $2,726 per second.
Short of government intervention or the wholesale shutdown of colleges and universities, our national student loan debt is a bubble with no end in sight.
As the costs of college continue reaching greater heights, so do borrowing levels.
And with wages stagnating for the majority of U.S. workers, paying those loans back has become a costly and seemingly impossible endeavor.
Still, some people find a way to make it work.
Either through serious levels of self-discipline, sacrifice, or any one of a number of financial moves, they pay off their loans – and never look back.
Here are 9 of the best strategies from recent grads you can use to pay off your student debts sooner and move on with your life!
#1 Prolong the poor student lifestyle.
Graduating from college might feel like your first real “burst” into adulthood, but you might want to hold off popping the champagne.
If you avoid big purchases for a year or two and continue living the poor student lifestyle, you may be able to parlay your new adult salary into a scenario where your student loans are paid off sooner.
Finance guru Dave Ramsey’s mantra rings true here:
Live like no one else now so you can live like no one else later.
Living the poor student lifestyle for as long as possible is a smart way to pay down debt when you’re first starting out.
If you have roommates, keep them.
If you’re managing to get by on Ramen, keep it up.
The most important thing to remember is to use your newfound salary to pay down your student loans as quickly as possible – instead of using it to inflate your lifestyle.
#2 Use the debt snowball method (and watch the debt roll away).
We’ve written about the debt snowball method for getting out of debt before.
Basically, it works like this:
- Start by creating a list of all of your student loans with the smallest balance listed first and the largest listed last.
- As the months go by, you’ll snowball all your extra money towards the smallest balance while paying minimum payments on the rest of your loans.
- And as each of the smaller balances wither away, you’ll be stuck with fewer loans – and less debt over time.
The benefit of this strategy?
You can lump other debts in there, too.
For instance, if you have a car payment, you can list it with your other loans and attack all your debts with equal fervor.
Knock them down one by one, I say, and don’t look back.
#3 Take on a side hustle.
If you want to pay your debts down even faster, earning more money is one approach that always works.
The key, as always, is using your extra money to pay off your student loans instead of wasting it somewhere else.
We’ve shared myriad side hustles here on Good Financial Cents in the past, from 65 side hustles you can do from your kitchen table to ideas on starting an online business.
The basic principles are the same no matter what side hustle suits your fancy.
Pour as much time or effort into it as you can, and use all the extra money you earn to pay off your student loans.
#4 Refinance your highest interest student loans.
Although refinancing isn’t ideal in every situation, thousands of students are saving money and shortening their repayment horizons by refinancing their student loans each year.
Companies like SoFi offer new loans with lower interest rates and better terms.
If harnessed wisely, these new loans create a pathway for borrowers to repay their loans quicker – and save money in the process.
There are certain pitfalls to watch out for with this strategy, however.
For example, refinancing federal student loans with a private lender means losing out on federally-funded perks and backstops such as income-based repayment, deferment, and forbearance.
Further, you’ll want to make sure you’re actually getting a better interest rate if you refinance.
Otherwise, it’s probably not worth it.
This loan calculator from SoFi can help you decide.
#5 Pay off your loans while you’re still in school.
If you haven’t graduated yet, it’s not too early to start preparing for the inevitability of that first student loan payment.
If you’re earning an income, it’s probably wise to start paying down your student loan balances right away.
And if you don’t earn an income, you’ll probably thank yourself later if you put the key task of finding a part-time job on the agenda – and stat.
Many student loans accrue interest while you’re still in school, and that interest gets added to your total once you graduate.
By making payments all along, not only can you diminish your total loan balances, you can also cut down your cumulative interest all along.
#6 Make more than one payment per month.
If you want to pay down your loans fairly quickly with minimal hassle, making more than one payment per month is a reliable approach.
Some people might choose to simplify the process by making bi-weekly payments that coincide with payday, although others may opt to make random payments throughout the month.
Neither strategy is better than the other as long as the extra payments are actually being made.
By making extra payments, you’ll be in the position to reduce the principal on your student loans at a faster pace.
You could also save a boatload of money in interest by prepaying your loan and speeding your payoff date up by months, or even years.
#7 Pay more than the minimum.
There’s a reason this number is called the minimum.
It’s the lowest amount you can pay on your debt and will lead to a minimal change to your total.
If you want to see your debt decrease quickly, go the extra mile when your finances permit and pay as much as you can.
Want another way to pay more?
Take your next refund, raise, or generous gift from grandma to the bank and pay down your student debt.
Making a lump sum might be painful in the moment, but it’s one of the best ways to whack away your debt.
#8 Enroll in an automatic payment program.
Some student loan servicers offer automatic, paperless payment programs to take the pain out of writing a check and auto-debit your checking account on a certain day of the month.
Better yet, some of these programs will offer a discount for signing up – or for signing up for paperless statements.
These programs make it easy to stay on track with your student loan payments.
And remember, you can always make extra payments manually if you want.
The best part about automatic debt is you’ll never, ever be late.
#9 Ask your boss for help.
While asking your boss for help with student loans is a fairly novel concept, it isn’t unheard of.
Actually, nearly anything is on the table when you’re negotiating your salary or benefits – and sometimes, the key to getting what you really want is just asking for it.
Further, some industries and government agencies have already thought of this option, though.
For example, some government employees can receive up to $10,000 a year towards student debt repayment by accessing the federal government’s Student Loan Repayment Program.
Similar programs are also available for nurses and teachers through the Nursing Education Loan Repayment Program and Teach for America, which is part of AmeriCorps.
Students who find work in the public sector can also get help with student loans by applying for the Public Service Loan Forgiveness Program.
With this option, the federal government will forgive the remaining balance on your Direct Loans provided you have made 120 qualifying payments and remained employed with a qualified employer in the public service sector.
The Bottom Line
As the nation’s total student loan debt levels continue to rise, we all have to take responsibility for ourselves.
Let the numbers fall where they may; it’s up to us to find ways to get our finances straight – and if that process includes paying off student loans the hard way, so be it.
Just remember, you’ve got a wealth of tools at your disposal.
Using everything from debt calculators to budgeting tools, you can dream up dozens of ways to get out of debt faster, and most importantly, smarter.
And with student loan debt levels at an all-time high, you’re going to need all the help you can get.
The post How To Pay Off Student Loans Faster Than Ever appeared first on Good Financial Cents.
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