For many people, higher education comes with a high price tag. But the burden can be more costly for Black women.
The latest student loan research from The Motley Fool found that Black women are trying to tackle an average of $41,466 in undergraduate student loan debt one year after graduation.
All women, on average, have $31,276 in undergraduate student loans around the same time period compared to $29,270 for men. This means that Black women typically end up dishing out more money toward student loan debt than any other group in the United States.
Although the stats are enough to sound the alarm, there are ways to reduce the stress of student loan debt so that it doesn't get in the way of other financial goals.
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Create a financial plan based on your goals
There might not be a magic formula to pay off student loan debt overnight, but there are a few steps you can take right now to be in control of your financial future.
First, identify your payoff goals and payment options. For example, you can stick to a standard 10-year repayment schedule. But if you have cash to spare, you can chip away at your student loan debt faster by making extra monthly payments.
Let's say you borrow $40,000 in student loans with 5% interest. Your monthly payment on a standard 10-year term would be $424. But if you paid an extra $100 a month toward that loan, you could shave more than two years off your student loan repayment date.
Another option is to look into student loan forgiveness. If you qualify, your student loan debt could be wiped away after you make a certain number of qualifying payments under a qualifying repayment plan.
When reviewing your payment options and creating your financial plan, it's important to consider your other goals and answer the following questions:
- Do you have an emergency fund?
- Can you take advantage of an employer-sponsored retirement plan?
- Are you investing in new skills so that you can increase your earnings potential?
- How much money do you have coming in compared to what's going out?
Creating a strategic student loan payoff plan while trying to tackle other financial goals isn't easy by any means. But that doesn't mean it's not possible. If creating a financial plan becomes overwhelming, don't be afraid to ask for help. Working with a professional can help you save thousands of dollars in student loan debt without sacrificing your long-term goals.
Planning early can lead to the highest rewards
If you want to squash high amounts of student loan debt altogether, planning ahead will be key to your success. I was able to pay off all my student loan debt before graduating from college by doing the following:
- Applying for scholarships. Even if you don't get a full-ride scholarship to the school of your choice, there's still a chance to accumulate scholarships while in college. I applied for more than 100 scholarships and received funding for my commitment to leadership, service, and academics.
- Obtaining profitable internships: While in high school, I built my resume through volunteer opportunities. I gained a wide range of skills and experiences that made it easier for me to attract paid internships while in college. I used a portion of the money from internships to pay off debt.
- Exploring fellowship opportunities: If you're looking to beef up your skills in a certain area and take advantage of experiential learning, you should look into fellowships. My fellowships included education awards that helped me pay for school.
Becoming debt-free before graduation took a lot of planning and networking. The earlier you start, the more options you'll be able to take advantage of. However, when you start planning isn't as important as creating a realistic action plan that works for you. Wherever you are right now, you have the opportunity to make a few strategic moves that can set you up for a lifetime of rewards.
Your next best move
If you've already racked up student loan debt, your next move is to explore your payoff options. That could be an expedited payment plan or student loan forgiveness. But if you're just getting started on your journey, you could minimize your student loan debt by looking at alternative ways to pay for your education.
No matter where you are, it all boils down to having a plan and positioning yourself to create the future you want. As soon as you tackle student loan debt, you'll have more money available to crush other financial goals.
