Are you struggling to make ends meet because of your student loan debt? You’re not alone. According to the Federal Reserve, Americans collectively owe over $1.7 trillion in student loan debt, and the average borrower owes over $37,000. If you’re feeling overwhelmed and unsure of what steps to take, this guide will provide you with actionable strategies to help you get out of student loan debt.
Student loans can be a necessary evil for those pursuing higher education. While they provide financial assistance to students who may not be able to afford college, they also come with a hefty price tag. With interest rates that can skyrocket over time, student loans can be a burden that lasts for years after graduation. But don’t worry, there are ways to take control of your debt and pay it off for good.
The Snowball Method: A Popular Debt Repayment Strategy
One popular strategy for paying off debt is the snowball method. The idea behind this method is to pay off your debts starting with the smallest balance first, then moving on to the next smallest balance, and so on. By starting with the smallest balance, you can quickly see progress and gain momentum. As you pay off each debt, you can add that payment amount to the next debt’s minimum payment, effectively snowballing your payments until all debts are paid off.
Consider Loan Forgiveness Programs
If you have federal student loans, there are several loan forgiveness programs that you may qualify for. These programs forgive a portion or all of your student loans in exchange for working in certain fields or meeting certain criteria. For example, the Public Service Loan Forgiveness (PSLF) program forgives the remaining balance on your Direct Loans after you have made 120 qualifying monthly payments while working full-time for a qualifying employer.
Refinance Your Loans
Another option to consider is refinancing your student loans. Refinancing involves taking out a new loan with a private lender to pay off your existing student loans. This can be a good option if you have high-interest loans and can qualify for a lower interest rate. Keep in mind that refinancing federal student loans will make you ineligible for federal loan forgiveness programs, so make sure to weigh the pros and cons before making a decision.
Make Extra Payments
Making extra payments towards your student loans can help you pay them off faster and save money on interest. Even small additional payments can add up over time. Consider putting any extra money you receive towards your student loans, such as tax refunds, bonuses, or a side hustle income. Be sure to let your loan servicer know that you want the extra payments applied to the principal balance to ensure that you’re making progress on your debt.
Budgeting Tips to Help You Get Out of Student Loan Debt
In addition to the strategies mentioned above, it’s important to establish a budget to help you manage your finances and prioritize your student loan payments. Here are some tips to help you get started:
1. Create a Budget
Start by tracking your income and expenses for a month. This will give you an idea of where your money is going and where you can cut back. Create a budget that includes all of your expenses, such as rent, utilities, groceries, and entertainment, and make sure to allocate a portion of your income towards your student loan payments.
2. Cut Back on Expenses
Once you have a budget in place, look for ways to cut back on expenses. This may mean cutting back on dining out or canceling a subscription service. Every dollar saved can be put towards paying off your student loans.
3. Increase Your Income
Consider picking up a side hustle or finding ways to increase your