Going to college is one of the best investments you can make in your future. Unfortunately for most people, it also comes at an excessive cost. It is most likely that if you are in college, you will leave with some debt. If you don’t know how to get out of that debt fast, it could be years before you are debt free.
There are ways you can get out of college debt, and they aren’t as tricky as you might think. Getting out of school debt takes some dedication but paying off school debt is well worth it. Don’t let the worthwhile investment of your college education way you down with insurmountable debt. Start using these tips and make getting out of school debt easy and possible.
Steps to Getting Out of School Debt
You don’t have to let school debt weigh you down for years after your graduation. There are simple steps you can take to cut down your repayment time by half. Here are just a few of the ways to get started to a debt-free life.
You don’t have to wait until you graduate college to get out of college debt. While you are still in school, you can get a job to start saving money for your future loans. The more money you have saved to start paying off your loan, the less time it will take to pay it off entirely.
You can also take on side jobs after you graduate in addition to your regular job. You can work on the weekends or part-time if your schedule allows. Yes, this option might take a little extra effort and work, but if you put in the commitment now, it will pay off in the end.
Create a Budget and Stick to It.
Creating a budget might not seem like a revolutionary tip to getting out of school debt, but it is one of the best. Once you graduate and have a job, sit down and create a budget for all your expenses including your school loans. A budget will help you prioritize your money and use it where it is most needed.
The other half of creating a budget is actually sticking to it. It might be tough at first if you have never used a budget before, but once you see your money working for you, it gets easier. Use the goal of sticking to your budget as motivation to keep paying down your loan.
Increase Your Minimum Payment.
Most times people only pay the minimum on their loans. It’s often a low amount, and it’s easy to maintain when you have other expenses to pay. But if you continue to pay only the minimum it will take much longer to get rid of your school debt.
You don’t have to add a ton of extra money to your loan payment each month. Something as little as an additional $20 can help you shave months or possibly years off your loan repayment time. The best way to do this is set up automatic monthly payments and include the extra money. This means you don’t have to remember adding to your minimum payment, and you are more likely actually to pay more money.
Put Any Extra Money You Get Towards Your Loan.
Sometimes you might get some extra money from things like bonuses, inheritances, lottery winnings, or any number of reasons. While it might be tempting to use that money for bigger better things, you can put it towards paying off your loan.
Perhaps you don’t have any extra cash from bonuses or inheritances, but you might get extra money after your taxes. Use that money to pay off your loans faster. Even with only one big payment each year, it can make getting out of school debt easier.
Consolidate or Refinance.
Refinancing your student loans is one of the best ways to pay off your school debt faster. Consolidating or refinancing lowers your interest rate, often the part of your loan that makes it longer to pay it off completely.
If you have multiple school loans, try to consolidate them. By consolidating you can combine all your monthly payments into one easier to manage payment. If you have loans with very high interest rates, you might want to consider refinancing to make the interest more manageable. Keep in mind that you can only refinance one loan, so choose the one with the highest rate.
Strategize Your Loan Payments.
If you have multiple loans, you might be tempted to pay off the loan with the least amount of money on it. It seems logical, but this could hurt you in the long run. Because while you are focusing on paying down the smallest loan, which often has the lowest interest rate, your other loans will still accumulate interest.
Start prioritizing the loan with the highest interest rate. Add extra money to that loan each month so you can pay it off faster. Once that loan is gone, take the money you were paying for it and add it to your next highest loan. This is called the snowball effect and will get you to a debt free life much faster.
Find a Job that Offers Loan Forgiveness.
This tip might be a little harder for some students after college because there are only a few jobs that offer loan forgiveness. These jobs include positions at places like public service organizations or teaching. By taking a position at a place that offers loan forgiveness, you can eliminate your debt completely.
There are a few caveats to this option though. Usually, you have to work for a certain number of years before your loan is forgiven. There are also particular requirements you need to meet to get loan forgiveness. You also need to be aware that these programs use income-based repayment systems, so while you’re working there your payments might decrease, but your interest will accumulate. If you don’t make it to the end of the loan forgiveness program, you might end up with more debt than you started.
Frequent Questions About Student Loans
There are a lot of questions people have about student loans. Here are some of the most asked questions and their answers.
Can I go back to school with student loan debt?
As long as you haven’t defaulted on your current student loans, you should be able to go back to school even with debt.
If you have defaulted on your loans, you will need to make up all the back payments and create a repayment plan with the lender. Once you are back in good standing, you can return to school. One thing to keep in mind, you might incur more debt by going back to school and have even more to repay once you graduate. This shouldn’t deter you from going back to school but motivate you to use these tips to pay your debt back faster.
Should I defer my student loans?
Many lenders offer deferment plans that allow you to put paying your loans on hold for a certain amount of time. This could be beneficial if you have financial difficulties and you are in danger of defaulting on your loans. Don’t defer your loans if you just want a little extra time to save up and pay for your debt.
Are there any ways I can get my loans forgiven?
Other than getting a job that will forgive your loan after you’re with them for a set amount of time, there are a few ways you can have your loans forgiven. These include:
- Proven disability
- Perkins loan cancellation
- Finishing a payment period through an income-driven repayment program
- Closure of the school you attended
Is there any way to get a student loan out of default?
You have two options to get a loan out of default. If you have the means, you can pay off the full amount of the loan. The second choice is to work with a loan officer to rehabilitate your loans. You might have to consolidate your loans or rework your payment plan, but these can start the process of getting your loan out of default.
Life with Student Loans
Just because you have student debt doesn’t mean that you can’t enjoy life. You don’t have to completely cut out all fun and enjoyment just to become debt free. This is where a budget can come in handy because you can still prioritize getting rid of your loan while also allocating some money to fun.
The primary goal is to have a good balance of paying off your loans as quickly as possible and still living life as normally as possible. Take some time to create a budget and then look at the rest of these tips and see which works best for your loans and your goals. You don’t have to do anything crazy to get out of school debt, and you don’t have to be saddled with loans forever. Take tiny steps each day, keep making progress, and your loans will be gone before you know it.