How to Get Out of Student Loan Debt With These Simple Strategies
Wondering how to get out of student loan debt? Did you know one-third of American millennials have over $30,000 of student loan debt?
Student loan debt can make young people put off buying a home and saving for retirement. But it can be mentally draining as well. While 64% of millennials admit to stressing about their finances, half of them believe that this stress has a negative impact on their health.
However, there are several simple approaches you can take to get out of student loan debt.
Let’s look at how you can alleviate your student loan debt woes.
Make Bi-Weekly Payments
If you want to reduce your repayment time and save on interest, consider bi-weekly payments. This approach doesn’t involve paying twice as much per month. Rather, you slice your monthly payment in half and pay that amount every two weeks.
Using this strategy, you end up making one more payment than you normally would per year. Plus, if receive your paycheck bi-weekly, you won’t feel the sting as much.
Just focus on making both payments before your next due date. Otherwise, you’ll pay less than you actually owe every month.
Look into Student Loan Forgiveness Programs and Options
If you have trouble affording your payments, check to see if you qualify for any of the following income-driven repayment plans:
- Pay As You Earn
- Revised Pay As You Earn
- Income Contingent Repayment
- Income-Based Repayment
Teachers may be eligible for teacher loan forgiveness. There are also many state and national loan repayment assistance programs for nurses, doctors, and lawyers.
Refinance Your Loan
Student loan refinancing is an option you can explore if you have a high-interest loan. If you make a steady living and have a strong credit score, you may have a chance to reduce your interest rate.
But keep in mind that there are downsides to refinancing a federal student loan through a private lender. For starters, you can no longer take advantage of federal repayment options. You also forfeit your eligibility for federal loan forgiveness programs.
Always compare loan terms before making a decision. If you refinance, choose a lender that doesn’t charge application or origination fees.
Use the Debt Avalanche Strategy
If you have multiple student loans, the debt avalanche strategy can prove to be useful.
With this method, you focus on paying off the student loan with the highest interest rate first. You only pay the minimum for the rest of your student loans.
It allows you to save big on interest while paying your loans off much faster.
Try the Debt Snowball Strategy
If you don’t want to wait too long to see your balances shrink, the snowball strategy might be a better option to get out of student loan debt.
This method involves paying the bare minimum for everything but the student loan with the smallest balance. You put as much money towards your smallest loan as you possibly can.
Unlike the debt avalanche strategy, this one provides immediate results. As a result, it motivates you to continue paying extra.
Final Thoughts on How to Get out of Student Loan Debt
While being in debt can be extremely stressful, you can use it to motivate yourself to work harder. Online side gigs like tutoring, or editing can help you earn some supplemental income.
Are you struggling to pay off your student loans? Have you used any of the strategies mentioned above to get out of student loan debt? Let us know about your experiences down below.
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