You walk across the stage grinning from ear to ear. College is finally over, and you’ve landed your dream job. Life’s great. Fast-forward a few months, and student loan debt has taken your wallet captive.
You’re definitely not alone.
The Project on Student Debt says, “Seven in 10 seniors (69 percent) who graduated from public and nonprofit colleges in 2013 had student loan debt, with an average of $28,400 per borrower.”
But there is hope. Here are 13 ways to expedite the repayment of your student loans.
1. Face the music
Taking responsibility for your student loans is the first step. It’s impossible to solve a problem you don’t realize you have. Be positive and remember why you incurred the debt.
2. Make a plan
If the result is unfavorable, revisit the drawing board to make cuts to your variable expenses. Stop eating out every night of the week, hanging out at the bar with pals, treating yourself to spa treatments, throwing away money on cellphones and cable and going on random shopping sprees. These are just a few ideas to help you get started.
3. Stop using debt
Money is tight, but you’ll never dig yourself out of the hole if you keep relying on debt in the crunch. And refrain from opening any new accounts. Freeze the credit cards in a block of ice if you have to.
4. Start making payments immediately
Still in school? Any amount you can contribute to debt repayment helps, even if it’s only $25 biweekly and the loan is deferred.
5. Get a side gig
Whether it’s a part-time job or an occasional freelance opportunity, any extra income used to pay down your student loans can reduce the repayment period.
Let’s say you have a $5,000 loan with a five-year term, 6 percent interest rate and $96.66 minimum monthly payment. If you’re able to generate $100 per month to use toward the balance, you will reduce the repayment period by 32 months.
6. Implement the envelope system
Having a hard time keeping your spending habits in check? Try implementing the envelope system, which forces you to rely on cash. Once the cash is gone, it’s gone.
Say goodbye to that posh apartment downtown and hello to your new roommate or parent’s basement. This is definitely a sacrifice, but it will free up a nice chunk of cash to allocate toward those balances.
Using the illustration from above, if you’re now able to reduce your living expenses by $600 and allocate this extra amount to the balance each month, the loan will be paid off in eight short months.
8. Double up on payments
This should be easier to do once you have slashed your variable expenses in half. The more you pay each month, the less interest that accumulates. And for those months of the year with an extra week, make an extra payment. But only double up if your wallet permits; if you have credit card debt with an exorbitant APR or any past-due balances, pay those first.
9. Tackle the most costly debts first
Similar to credit cards, the higher the interest rate, the more you’ll pay over the life of the loan.
10. Enroll in automatic withdrawals
Not disciplined enough to make timely payments over the minimum amount? Opt in for automatic payments to ensure the money is remitted to the lenders on time. Some lenders offer discounts for enrolling.
11. Consolidate your loans
Loan consolidation is convenient and free of charge for federal loan holders, but limitations apply. It should only be done for the sake of organizing your debts, and not reducing the amount you remit each month through a prolonged repayment term. There are also drawbacks to consolidation, such as losing the beneficial repayment options and terms that came with the original loans.
12. Inquire about loan forgiveness programs
Public service workers and government employees, educators and nurses are sometimes eligible for loan forgiveness programs. The U.S. Department of Education Federal Student Aid website provides a comprehensive listing of the most common discharge, cancellation and forgiveness programs.
13. Pat yourself on the back
As humans, we are wired to be rewarded for our accomplishments. If you’ve trained your mind to sweep successes under the table, now’s the time to revive those incentives that you once looked forward to and propel yourself into action.
Most importantly, it’s mind over matter. If you approach this feat with a negative attitude, you may find yourself drowning in debt forever. But if you take the opposite approach, your debt will be gone in no time.