We are facing a crisis.
Today, Americans owe over $1.3 trillion in student loan debt. That staggering number is often credited with keeping millennials from achieving financial success.
If you’re burdened with student loan debt, don’t give up hope. There is a way out.
In this article, we’ll look at how you can get rid of student loan debt in five steps.
1. Find the right repayment plan
Not every repayment plan is created equally.
When it comes to student loans, most repayment plans are either based on the repayer’s income or on a flat monthly rate. Depending on your financial situation, you may have a preference over one or the other.
Many people chose the plan with the lowest monthly payment. But over the lifetime of the loan, this can accrue much more interest. If you can afford to make larger payments, you should do so.
2. Look into unconventional options
There are more ways to pay off a student loan than merely making payments on the balance.
Debt consolidation
If you have a large number of different loans with varying interest rates, it might be in your best interest to look into debt consolidation.
A third party purchases all of your loans from the loan owners and afterward, you make a single payment to the new company.
Often, the interest rates are lower, and monthly payments are more manageable than with several separate payments.
Debt forgiveness
Many companies offer student loan forgiveness programs. For instance, Navient student loan forgiveness offered debt forgiveness based on income, public service, or disability.
Contact your student loan company to see if there are any debt forgiveness options you can use to your advantage.
Ask your employer to pay your loan
If you’re feeling bold, you can negotiate with your employer to pay you a lower salary in exchange for a payment toward your loan.
This might seem like a longshot, but in an economy where companies are struggling to provide proper compensation to qualified talent, it’s a deal your boss might just take.
3. Pay extra when you can
When you come into some extra cash, it can be tempting to spend it on a nice dinner or an item from your Amazon wishlist. Resist that urge.
Putting that money toward extra loan payments can go a long way towards getting rid of student loan debt.
But don’t pay extra aimlessly. It pays to be strategic…
4. Attack variable- or high-interest loans first
Not every loan is the same. Take a look at the interest rates of all of your loans.
Focus all of your extra payments on the loans with the highest interest. If any loans have variable interest rates, that includes these.
Once you pay off your highest-interest loans…
5. Snowball that debt!
Once you’ve paid off your first student loan, you’ll find yourself with a significant chunk of change freed from your monthly budget.
Don’t waste it.
Take the old monthly payment and apply it to your next highest-interest loan until that is paid off. After that’s paid off, take both amounts and pay it towards the third highest loan. And so on, and so on.
You’ll be shocked to see how fast your loans disappear!
Say goodbye to student loan debt!
Think about what your life would look like without student loan debt. Following these tips, you can make that dream a reality.
What’s your favorite tip? Did we miss anything? Let us know in the comments!