According to Market Watch, a staggering 40 million Americans are still working to pay off their college educations. Even students who didn’t end up graduation, or who were able to qualify for and obtain partial funding for their degrees, are still frequently forced to take out loans to balance the costs of college.
That’s because the cost of a college education in the United States has exponentially increased in recent decades and only continues to soar. The average annual cost of a four-year degree ranges from $9,650 to $33,480 depending on whether students enroll in- or out-of-state and whether the university is public or private, says Student Loan Hero. This leaves approximately seven in 10 seniors who graduate with an average of $28,950 in student loan debt, according to The Institute for College Access and Success.
The financial burden of student loans can take a serious toll on anyone’s budget, so it’s important to take steps to effectively manage student loan debt. Below are some of the best tips for paying off student debt faster and more affordable.
- Don’t go delinquent. The number one rule of paying off student loan debt quickly and efficiently is to avoid getting into trouble with your lenders at all costs (no pun intended). “Ignoring your student loans can cause your total loan balance to become due, ruin your credit score, result in garnishment of your wages, and dramatically increase the total amount you pay,” advises NBC News. “Federal loans offer flexible solutions including temporarily suspending or reducing payments,” so there’s little reason to default if you’re willing to just communicate with your loan servicer.
Remember that one of the most difficult and frustrating things about becoming delinquent on student loan debt is that it is almost impossible to make the debt go away, even if you file for bankruptcy or qualify for another credit repair. The only way to make your student loan debt go away is to pay it off as quickly as possible, so don’t bury your head in the sand on this one.
- Explore repayment options. So, remember all that stuff about there being no way to get out of student loan debt except to pay it back? That’s mostly true, but there are still some programs established to help borrowers manage their student loan debt, like the Public Service Loan Forgiveness Program and the Income-Based Repayment Plan.
Under the Public Service Loan Forgiveness Program, public servants (government employees and qualified nonprofit workers) can make just 120 consecutive, on-time payments before having the remainder of their student debt forgiven, for example. Since many of these programs are also Income-Based Repayment Plans, public servants can usually have their 120 monthly payment amounts adjusted to reflect their annual income, which helps to ensure graduates’ monthly payments do not exceed more than 10-15 percent of their discretionary income, says Student Loan Hero.
- Start paying, keep paying. As BalanceTransfers rightly points out, the quickest way to get out of student loan debt is to just start paying on the balance and keep attacking it until it’s finally paid off. This may sound obvious, but there are plenty of ways the average borrower manages to procrastinate starting to pay back their loans and/or doesn’t efficiently pay back their principal.
Most loans have a six-month grace period before graduates are expected to start making monthly payments, for example; you should aim to make payments during that entire grace period. Many loans accumulate interest even when they are in deferment for graduate school or continued education; if this is the case for you, make every effort to continue paying down interest so you don’t get stuck paying a compounding rate later. If you have extra money to apply toward your loan due to income tax returns or a Christmas bonus, make sure you send in the payment to be applied to principal. These are the things that will help you get out of student loan debt ASAP.
- Stay informed. Although most students take out federal or state loans to fund their college educations (only about 10 percent of total student loan volume comes from private loans, according to USA Today), that doesn’t mean that your loans aren’t subject to transfers or changes. Lenders trade loan balances all the time, so make sure you know who you’re paying and never trust automated payments to run on auto-pilot, especially if you’re counting on making 120 consecutive, on-time payments for a forgiveness program.
Even though the vast majority of student loan borrowers will take the entire duration of their loans’ terms to pay back the balance, it is possible to pay back student loan debt more quickly. Not only will getting out of debt as fast as possible feel amazing, it will also end up saving you a lot of money in unnecessary interest in the long run. Paying off a huge debt like student loans is a long-term process that requires dedication, but the rewards are worth it!
Have you already paid off your student loan debt? Share how you got out of debt in the comments.