Are you feeling the burden of your student loans? You’re not alone. Nearly 70% of students are take out student loans to attend college. Current student loan debt is at an all-time high with averages more than $35,000! Some students are graduating college with as much as 100k in student loans! This is leaving many students paying off college loans well into adulthood.
Student loan debt relief is a major desire for many young Americans. We see students paying off college loans as a necessary evil, to get a degree and a good job. But these loans are delaying some normal life stages, like homeownership, marriage, and starting a family. Taking out a loan is easy, and many young people don’t realize the long term cost and challenges of getting that student loan check.
So, is there a way out of your student loans? Yes, there are a few. But they apply to very few people. Those who die or become permanently disabled can have their loans forgiven. But for the majority of those in debt, repayment is the only option. But how the loans are paid and who pays them can make a big difference.
The best way to pay back student loans and have victory over your debt is to weaken your enemy, find allies to fight your enemy and then to attack your enemy! Your school debt is your enemy and has you captive behind its prison bars. You must break free. Fortunately, this enslaving debt will one day lose its hold on you. But you are the one who gets to choose how soon those prison doors will open. Let’s take a look at 3 strategies for destroying your student loans fast.Survey Your Enemy and Weaken His Power.
Ignoring your enemy will not make him go away or bring freedom. The first step is to take a look at your debt enemy and determine if you can weaken his power against you.
The principal you owe is a set amount that needs to be paid down. But the interest rate can be variable. The current federal student loan interest rates is 4.53% for undergraduate loans. The private student loan interest rate varies between 2.52% to almost 12% depending on the lender and if the loan is fixed or variable.
Small percentage changes in your interest rates can make big changes to the amount of interest that you pay back. So if you reduce student loan interest rate you weaken your enemy. Consider refinancing your student loans to reduce the interest rate and reduce the total amount that you need to pay back.
Refinancing your student loan involves a new lender paying off your old debt and now giving you a new loan with a lower interest rate. It’s a good idea to pursue refinancing to reduce the amount of money that you end up paying.
You may not want to refinance your loan if you are hoping to be hired for a government job that will help you pay off your loan. Public Service Loan Forgiveness repayment won’t work with private loans, which is what you would have after a refinance.
Some people believe that consolidating loans helps reduce the cost, and it may. Consolidation takes multiple smaller loans and makes it one loan payment. If you choose consolidation, be sure that the total interest rate for the consolidated loan is less than the average interest rate of your current loans combined. It may actually be better to have multiple loans because it’s multiple smaller enemies to have victory over than one large enemy. Having victory over each loan provides the opportunity to celebrate smaller victories and to create momentum.
Sometimes one’s interest rate can be lowered a portion of a percent by setting payments on autopay through your bank account. Although a small amount, every little bit cuts money off your loan.
Look for Allies to Help Fight Your Enemy
Because of the burden of student loan debt, some companies have agreed to help pay that debt down as an employee benefit. Ask your HR department if they have a student loan repayment program that you can participate in. If they have one, great! Sign up. But if they don’t have one, ask if they would be willing to start one. It may be a good business move for them, by helping them to draw in fresh young professionals also looking to pay down their student loans.
There are also some occupations that agree to pay off some or all student loans for working a particular job. For example, teachers can have their loans paid off or forgiven for working in inner-city/low-income schools for a certain number of years. Those who work as federal employees, who are willing to sign contracts, can also apply to receive student loan forgiveness. Doctors who work in an area considered “public service” can potentially receive loan forgiveness through the Public Service Loan Forgiveness Program. Nurses can receive some loan forgiveness if they qualify for the Nurse Corps Loan Repayment Program. There are also programs for dentists, veterinarians, pharmacists and lawyers. Although none of these are a golden ticket to loan forgiveness, they could be potential allies to help you fight your enemy and mean less money out of your pocket.
1. Attack Your Enemy
Next, list all of your debts in order of highest interest rate to lowest. Some refer to this tactic as the debt avalanche approach. While paying the minimum payment on all loans, attack the highest interest rate loan first with any extra money. If all loans are the same interest rate, choose the smallest size loan to attack first. Once the first loan is paid off, use the money that had been going towards the now paid off loan to pay off the next loan on your list. Once that loan is paid off, put the amount that was going to the first and second loan towards the third, and so on.
Pay down your principal as quickly as possible. This is going to mean some sacrifice. Just remember that freedom is on the other side – and that freedom is going to feel soooo good! Look around for anything that you have that you could sell that would make some money. Maybe you have a nice car, you have some toys like a boat, jet-ski, rv, etc. If you have a nice car and sell it, purchase a less expensive car with some of the profits and send the rest to pay down your debt. For example: sell a $30,000 car, purchase a $5,000 car and put the $25,000 towards the debt. After you’ve paid off your debt check out (how to buy a new car every 2 years).
There are times in life when we may receive extra money like an inheritance, a raise or a tax return. Each of these is an opportunity to put that money to help you fight against your debt enemy.
If money is tight and there are no obvious resources around to liquidate to pay off your loans, then it may be time to pick up a side hustle. Side hustles are side jobs that pay extra money in addition to your regular job. There are money-making opportunities all around. And every little bit that pays down student loan debt is one step closer to your freedom. Look for a side hustle that you can do to pay down your loans more quickly. Check out Side Hustle for ideas. Put all side hustle money towards your debt. Who knows, after paying down all your debts, your side hustle may become your main hustle and something that you really enjoy.
Important note: When sending in additional payments it’s important to include instructions that the payment goes directly to the principal. If not, it may automatically go to future payments.
In short student loans are not your friend, they are your enemy. The best way to pay down student loans is not to take out student loans at all. The next best way to pay student loans and have victory over your debt is to weaken your enemy, find allies to fight your enemy and then to attack your enemy!
As you pay off each loan celebrate your victory. You have just conquered one part of your enemy, you have moved closer to freedom from debt!
For a lot more great information about student loans, check out studentloanhero.com and Dave Ramsey paying off student loans.
