Many people have no choice but to take out student loans to finance a degree. So if you're an undergrad who's racking up debt by the day just to get your diploma, you're in good company.
But that doesn't mean you shouldn't try to start chipping away at your debt while you're still in college. The sooner you start paying your student loans down, the less they're apt to cost you.
One of the smartest moves you can make
Billionaire entrepreneur Mark Cuban is a big fan of avoiding debt when possible. But if you want a college degree, that may not in the cards.
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And that's OK. Many people don't have massive college funds to tap, and a degree could open the door to a world of career opportunities you may not be privy to if you don't go to college.
But just because you have no choice but to take out student loans doesn't mean you can't or shouldn't do everything possible to get ahead of them. You may be inclined to work during your studies so you can free up cash for things like leisure and travel. But if you were to ask Cuban, he'd probably tell you to put every dollar that comes your way into your loans to start knocking them out sooner.
Cuban has been quoted by CNBC as saying: "Whatever interest rate you have -- it might be a student loan with a 7% interest rate -- if you pay off that loan, you're making 7%. That's your immediate return, which is a lot safer than trying to pick a stock or trying to pick real estate, or whatever it may be."
In other words, perhaps the smartest financial move you can make is to pay off debt early, according to Cuban. And he's not wrong. So if you're able to start chipping away at your loans as an undergrad, it can only work to your benefit.
Additionally, if you took out federal student loans, you should know that you may have a number of repayment plans to choose from once you graduate. And you may be tempted to get on an income-driven or extended repayment plan to shrink your monthly payments.
But a better bet may be to stick to the standard repayment plan for federal student loans, which has you paying off your debt over 10 years, and then aim to accelerate it by pumping extra money into your loans as you can.
Paying off your loans in a shorter time span may not be easy. You might have to make sacrifices, like moving back home for a period of time or taking on a side hustle on top of a full-time job in order to pull it off.
But it could save you a boatload of money and allow you to shed that debt sooner. From there, you can free up money to do things like save for retirement, invest, and make other moves that lead to a financially secure future.
