Student loans are growing increasingly common and increasingly burdensome. Americans owe upward of $1.5 trillion in student debt, and many graduates wind up carrying those loans well into their 30s, 40s, and beyond. If you’d rather not be grappling with educational debt later in life, here are a few steps you can take to knock out your loan balance sooner.
1. Start making payments before interest accrues
Many loans have a grace period during which interest won’t accrue. For example, federal loans generally give you a six-month grace period following graduation where you don’t have to worry about racking up interest. If you’re able to work during or immediately after your studies and make payments toward your loan during your grace period, you’ll not only whittle down your balance, but save yourself some interest to boot.
2. Refinance your debt
If you took out private loans for college, then chances are you’re looking at a hefty interest rate. Unlike federal loans, which have regulated interest rates, private loans aren’t restricted on the interest front, so these lenders can charge what they want. If you’re looking at a loan with an exorbitant interest rate, refinancing to a loan with a lower interest rate will lower your monthly payments. You can then take your savings and apply it to your loan’s principal to knock that debt out sooner.
3. Pay off your loans biweekly instead of monthly
Student loans are generally repaid on a monthly basis. But if you change up that payment schedule, it might help you eliminate that pesky balance sooner. One good strategy to try is dividing your monthly loan payment by two and making it every two weeks. In doing so, you’ll
end up making an extra payment over the course of a year, which will get you out of debt faster. Along these lines, making any sort of additional payment toward your loans will get rid of them sooner, so feel free to apply any extra cash you come into toward your principal, whether it’s a tax refund, a bonus at work, or even a gift.
4. Move back home after college
If you lived on your own during college, returning to your parents’ home may not be your ideal living situation. But if you’re willing to do it for a couple of years, you can take the money you'd otherwise spend on rent and use it to chip away at your student loans. Additionally, unless your parents insist that you split the bills, living at home will also save you money on utilities like water, electricity, and even internet and cable -- and all of that savings could make a serious dent in your loan balance.
5. Find a job that offers student loan repayment assistance
These days a growing number of companies are offering money toward student loans as a workplace benefit. If you’re looking to eliminate your debt faster, it pays to find a company that offers this perk, or ask your current employer to consider it as an additional benefit. Keep in mind that the money you get for your loans frequently comes with a few strings attached -- namely, that you’ll need to stay with the company for a certain period of time or otherwise be liable to pay it back. But if you’re willing to make that commitment, your employer might pick up part of your loan tab, thereby allowing you to knock it out sooner.
Carrying student debt can impact you not just financially, but emotionally. The sooner you get rid of that debt, the sooner you can enjoy life without the burden of nagging loan payments holding you back.