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Graduating from college is an exciting time. You may be sad about leaving friends and the place you’ve lived for four years, but you’ll be excited to begin the next step of your life. The prospect of a new job in the “real world” is thrilling.
There is a grey cloud handing over the celebrations, though, because of the seemingly never-ending student loan payments waiting for you. The class of 2017 is the most indebted class ever, with an average student loan balance of $30,000 to pay back, which is more than twice the amount borrowers had to pay back two decades earlier. Nearly 71% of bachelor’s degree recipients will have a student loan upon graduation; that compares to only 64% a decade ago.
So although it’s fun to imagine living the life after graduation, you may have to hold back on major expenditures for a while. Some strategies for keeping on top of your student loan payments will go a long way in paying off your debt.
Strategy #1 – Educate Yourself and Pay Off Smartly
Learn about your loans and how to pay off principal versus interest. Take the exit counseling or financial awareness counseling before you graduate seriously. It contains information you need about the terms of your loan, selecting a repayment plan and strategy, interest rates, and how to avoid defaulting. Pay more than the minimum amount and make sure it goes to principal. You may have to communicate directly with your lender to ensure this happens.
Strategy #2 – Research Loan Forgiveness
Take a look into the Public Service Loan Forgiveness program for individuals working full-time in public service jobs. You may qualify for the remaining balance of your Direct Loans to be paid off after 120 qualifying payments while working full-time for the government or a non-profit.
This can be the best option for students with high amounts of debt that won’t be paid off after 10 years and are interested in working in the public or non-profit sectors. However, there are qualifications that must be met, including working for a qualified employer and making 120 qualifying monthly payments. These are:
- Loans began after October 1, 2007
- You are under a qualifying repayment plan
- Each payment was for the full amount on your bill
- Each payment was made no later than 15 days after your due date
Strategy #3 – Live Simply
Your first pay check will be tempting to celebrate with, but do so in moderation. Keep your life simple and never spend more than you can afford. Factor in as much money toward your student loans as possible and you’ll keep yourself from falling behind.
Consider some extras you could do without; is a car an absolute necessity or could you take public transportation? Is your gym membership crucial or could you run at the nearby park or in your neighborhood? Although it may not be ideal and assuming your parents are okay with it, deliberate living with mom and dad to put a lot of cash toward your payments that would’ve gone to rent. Live with a roommate (or 2 or 3) to keep your rent payments low.
Strategy #4 – Pick Up Extra Work
Do you have any marketable skills? Pick up a part-time or freelance job and dedicate the earnings solely to paying down your debt. Whether it’s driving for Uber, doing odd jobs like carpentry, cooking, or landscaping, freelance writing or editing, tutoring or teaching, you may find you can take time in the evenings and on the weekends to earn extra cash. Not only will you expand your network, but you’ll earn money that will bring you even closer to zero debt.
Strategy #5 – Refinance or Consolidate
Considering the best student loan refinance options can help you save thousands of dollars on your federal or private loan over its lifetime by helping you pay lower interest rates. For a qualified student loan borrower, refinancing and consolidating can give you lower interest rates and lower monthly payments by combining multiple loans into one. Private loan refinancing lenders assess your credit score and financial information to find a match with current refinance rates.
These five strategies are some of the ways you can pay off your student loans fast after graduation. You usually have a 6 or 9-month grace period after graduation, so use the time to plan before the first bill arrives in your inbox. It’ll give you a smooth start to enjoying the life afforded by your degree.
Author: Jeff Gitlen