Many students have no choice but to take out loans to finance their education. But the emotional toll of carrying that debt can be tremendous. Holding debt of any kind, student loans included, can lead to stress, anxiety, and other negative feelings -- especially when that debt seems insurmountable.
Unfortunately, nearly half of students who have taken out loans or anticipate racking up debt worry they'll never manage to pay it off, reports Fidelity. If you share that fear, you should know that it is possible to shed that debt. Here's how.
1. Get yourself on a tight budget
The more you're able to pay toward your loans, the sooner you'll get rid of them. To this end, it'll help to start following a budget. That way, you'll see where your money goes month after month, and you'll be better positioned to identify cost-cutting measures that can free up cash to whittle down your loan balance.
To set up a budget, start by listing the expenses you incur every month, like your rent, your cable bill, and your car payment. Then, factor in other expenses that may not recur monthly, but cost you money nonetheless. These include things like professional license renewals and roadside assistance plans.
Once you see how much you spend on an ongoing basis, you can go through your various expense categories and identify those that you can possibly scale back on. For example, you can't change your rent payment (unless you're willing to move), but you can be more frugal with things like groceries, clothing, and entertainment.
2. Boost your income
Cutting expenses will help you carve out more money to put toward your outstanding loans, but so will boosting your income. That's why it pays to get yourself a second job, whether that involves consulting in your primary field or doing something totally different, like signing up to tutor, walk dogs, or design jewelry.
The best part about having a side gig? Your earnings from it won't be earmarked for existing bills, so you'll have the option to apply all of the money you bring in (minus taxes) to your loans.
3. Make your loans more affordable
Your loans will be easier to pay off if they cost you less money. That's why it makes sense to look into refinancing and get a lower interest rate. This especially holds true if you took out private loans for college. Federal student loans' interest rates are capped at a reasonable level, so chances are that you won't save much, or save anything, by refinancing them.
If you're not familiar with refinancing, it basically means exchanging one loan for a new one, ideally at a lower interest rate. And the lower the interest rate on your loan, the lower your monthly payments will be. This means that you'll have extra money each month to pay into your loan's principal, thereby eliminating that debt more quickly.
Refinancing your loans is a good option if your credit score is great. If it's not, work on raising it before applying.
If you're carrying a boatload of student debt, the idea of ever paying it off may seem laughable or impossible. But don't despair -- with the right strategy, you can shake that debt and enjoy the freedom of not having those monthly payments hanging over your head.