It is never easy to pay off a student loan. Many postgraduate college students are burdened by tens of thousands or even hundreds of thousands of dollars of debt.
And the numbers are a little scary.
Consider this, around 70% of American students take on loan debt to go to college.
And there are currently around 45 million Americans struggling to pay off their student loan balance.
The average student loan debt is now around $31,000.
The average monthly student loan payment is $393 which will take the average debtor between 10-30 years to completely pay off.
And the American collective educational debt now stands at 1.5 trillion dollars.
To put that into context, the national auto loan debt is around 1.3 trillion dollars and the national credit card debt is 850 million dollars.
Students owe more money than either the entire nation’s auto loan debt or the nation’s credit card debt…
…that’s really not good.
What can you do then to free yourself from your student loan debt and be one of the few that pay of their borrowings early?
Read on to find out.
Freeing Yourself From Student Loan Debt
Like most that went to college or university, you are perhaps one of the many that now owes a large amount of money.
Rest assured, as the above figures suggest, you certainly aren’t alone in this.
If the thought of paying back your student loan debt is getting you down then please be certain that you no longer have reason to despair.
There are many people around the world that have paid off their debts in a reasonable amount of time, helping to avoid further stress, anxieties, and the high interest and distressing monthly repayments that come with student loan debts.
Let us run you through how you can be one of the many people who have relieved themselves of student loan debt.
If you wish to be like them, follow these below steps.
Step 1: Consolidate Your Debt Into A Federal Direct Loan
The first step you should take is to consolidate your federal student loans into a Federal Direct Loan. Student debt loans that have been taken on in recent years will already be consolidated into a Federal Direct Loan, however, if you started your education several years ago your student debt loan my be spread across loans from different banks.
Particularly for those that changed course, universities, or studied multiple degrees.
If this is the case you’ll want to consolidate as soon as possible as you may be missing out on student loan forgiveness programs. Student loan forgiveness programs will make your student debt loan much more manageable to repay the money you owe.
We’ll touch a little more on student forgiveness programs shortly.
For now, though, consider this.
Consolidating your Federal Direct Loans will give you the opportunity to lower the amount of money you are required to repay per month by extending the duration of the loan.
This is particularly important if you are struggling to pay the current monthly repayment amount.
Step 2: Develop A Loan Repayment Plan
Once you have consolidated your debt, the next step you will want to take is to develop a loan repayment plan or strategy for your federal student loans. A good strategy you can employ is to combine any debt you may have with your student debt loan repayments. This may include credit card debt, car loans, or any other private loans you possibly may have.
When doing this be sure to prioritize your debts in order of the interest amount you are paying on each loan and the tax advantages you may receive as a consequence.
For example, it is advantageous to prioritize your federal student loans as a last priority given that you can claim deductions based on the amount of interest you pay on your student loan debt.
Repayment strategies such as this will make it far easier to repay the money you owe as fast as possible.
Step 3: Create A Budget You Can Stick To
After you have developed a loan repayment plan it is time to create a budget. This enables you to pay back the money you owe as soon as possible with the extra money you are saving by keeping a close eye on your finances. This is achieved by tightening your spendings and creating extra money that can be put towards your federal student loans.
Tightening your budget isn’t always easy, however, the sooner you start to make some lifestyle sacrifices the better off you will be in the long run.
A well thought through budget can help you see clearly which areas of your spending you need to clamp down on. You may be surprised about the amount of money you can save without too many sacrifices.
Let’s be real, the sooner you aren’t paying high-interest rates the sooner you will have more cash to spend on treating yourself to some well-deserved luxuries!
Step 4: Request An Income-based Repayment Program
Anybody who has federal student loan debt can apply to be put onto an income-based repayment program, especially for those that are having a hard time making their monthly repayments.
An income-based repayment program formulates your monthly repayments around your monthly household income and the number of dependents you may have.
You can reapply each year or as your personal or financial circumstances change. For example, if your income increases or decreases so will your monthly repayments.
And the best part about this program?
If you meet your on-time monthly repayments for 30 years any remaining debt will be forgiven.
This, however, only works for federal student loans, so be sure to make that Federal Direct Loan consolidation first!
Do you know another great way to pay off any student loan debts you may have?
Employ the services of a money management app.
Emma is one such money management app that will help you get your spendings under control and tighten up your budget as much as possible.
Leaving plenty of extra cash to relieve yourself of your student loan debt.
Emma is also great at bringing your attention to any sneaky banking fees you may not have noticed.
And the best part?
You can easily download Emma from either the App Store and Google Play Store.