4 Ways To Decrease Student Loan Debt
Jon Hamm. Kerry Washington. Alexandra Ocasio-Cortez. What do these three famous people have in common? Besides being more attractive and richer than most will ever be, they’ve also struggled with paying off their student loan debt.
That’s right, even the most famous names in the world aren’t exempt from the weight of education costs. Student loans are no joke. You leave university and enter the workforce only to discover that you’re thousands of dollars in debt from the last four (or more) years. So much for the American dream. But there are ways to make progress on paying off your student loans without having to resort back to your ramen and bus pass lifestyle. Here are four legitimate ways to decrease student loan debt while living comfortably after college.
Know Where You Stand
Be honest. Are you aware of the exact amount you owe on your credit cards? If not, you may be clueless about your student loan debt, as well…and that’s okay. Many sign off on student loans at a very young age – even as teenagers right out of high school – and let their parents figure out all the financial aspects of college while they’re out living their best lives. But now, as an adult, the first step to paying off student loans is determining just how much you owe.
Websites like Credit Sesame will provide a free credit report analysis that shows just how much money you need to pay back and to whom, including balances on both private and federal loans. It’s tempting to skip a few student loan payments and let the interest accumulate, but regularly checking your balance will keep you on the right track.
Attempt to Lower Your Interest Rate
Speaking of interest rates, they can be a real killer. You can save time and money by refinancing student loans, which means consolidating existing private and federal loans into a new, single loan, with a lower interest rate and monthly payment.
One of the best services for refinancing student loans is LendKey. Founded in 2007, this service lets you browse low-interest loans from community banks and credit unions. Instead of hopping from bank to bank in search of the right loan for you, you can simply go online, and find one with much less restrictive credit score minimums and income requirements. Getting a low-interest loan without even leaving your apartment? Sounds like a millennial’s dream.
Find a Repayment Plan Based on Income
It’s ideal to pay off your student loans quickly, but don’t go into debt while trying to pay off your debt. It may be beneficial to enroll in an income-driven repayment plan to avoid deferment or default, which allows you to keep making progress on repaying student loans while maintaining your lifestyle. Your college days are behind you; you don’t need to live on ramen to pay off debts! Do a bit of research, and decide which plan is right for you.The options include Pay As You Earn (PAYE Plan), Income-Based Repayment (IBR Plan), Income-Contingent Repayment (ICR Plan), and Revised Pay As You Earn (REPAYE Plan).
Use Apps to Build Savings
Building a solid savings cushion is one of the best financial decisions anyone can make, especially when it comes to debt. While student loans are one of the worst parts of being a millennial or Gen Z kid in 2020, this also means you have an endless supply of cash-saving apps on your phone. Chime, Mint, Stash…use them all to invest and grow your money as you put it towards your debts. Most of them do all the work for you. Just enter a few details like your age, income, and debt, and double-tap to start saving!
Student Loan Struggles
As difficult as it can be to juggle student loans along with rent, car payments, and trying to build a savings cushion at a young age, there are plenty of ways to make it better. Your education was one of the best investments you could have made for yourself, and it’ll definitely pay off in the end. Get started with a few tips, then you’ll be well on your way to increasing your financial health.