As student loan debt shoots past $1.5 trillion, it’s a growing burden for millions of Americans. It’s not just a struggle for those people, but for the economy as a whole. Getting by is extremely difficult when you also have to budget anywhere between $400 and $1,000 each month for loans.
This student loan problem is forcing people to seek out alternative ways to paying off their debt. Many are even just accepting their fate and going into default. That’s never a good option, as it always comes back to haunt you later by tanking your credit score. What you need is a strategy that works for you.
Maizie Simpson, a data editor with Credit Karma, believes having a plan to pay down your student loan debt is the best way to go. There are numerous reasons for that.
“The first has to do with interest: The longer you draw out your repayment period, the more interest you’ll end up paying,” Simpson said. “The second reason is that the longer you have student loan debt, the longer you might put off big life decisions or making investments in your future, such as starting a family or contributing to a 401(k).”
Here are 7 strategies for lessening your student loan burden:
1) Know How Much Student Loan Debt You Owe
There are a lot of people who try their hardest to not think about their debt. It’s not a priority to them. The total might be a lot to wrap your mind around, but you’d rather just ignore it and avoid the stress. It’s an understandable reaction, but not worth the trouble. Your debt is not going to disappear. Knowing what you owe is the first step to getting rid of it.
2) Figure Out Your Next Step
The best way to overcome any stressor in life is to not get overwhelmed. Take it one step at a time. If you’re in danger of missing a payment, consider what you’re going to do next. Should you file a forbearance? Find an income-driven repayment plan if you’re not making as much money? There are options out there.
“First, switch federal student loans to an income-driven repayment plan to lower monthly payments. Then, apply for deferment or forbearance to pause payments if you hit a major financial setback, such as losing a job,” said Simpson.
To learn more about your options, give Financial Helpers a call. We’ve helped thousands of people figure out a plan that works for them. We’ll even check to see if you qualify for student loan forgiveness. You can reach us at:
3) Focus on Your Student Loan First
Everyone wants to live the American Dream. To get there, most of us need to take out other loans, like a car loan or a mortgage. Piling debt on top of debt is never a good idea, as you’ll be so far in the red. The best course of action is to wait before making those major life decisions. Focus 100% on paying your student loan off before anything else.
4) Cut Your Spending Budget
Going along with point #3, you have to cut your spending. Tally up every bill you have and decide what you can do away with. For example, rather than a $100 cable bill, pay for cheap Netflix to get you by. It will be a temporary situation until your loan is paid off.
5) Make Extra Payments
Create a budget and if you have to, put most of your money directly into your loan. Paying it off faster will also cut the amount of interest you’ll pay overall. It can save you thousands in the long run. Once you’re out from under the burden, life becomes much more manageable.