According to a report by the Institute for College Access & Success’ Project on Student Debt, the average amount of student loan debt for college graduates was $29,400 in 2012 and $26,600 in 2011. Now, that is a lot of student loan debt!
If you recently graduated from college, or you are just now creating an action plan to pay off your student loans, the student loans tips below will help you eliminate your debt.
1. Calculate your total amount of student loan debt.
This one may sound easy, but you would probably be surprised at how many people do not realize how much student loans debt they have actually acquired.
Calculate your total amount down to the exact dollar so that you know exactly what you are dealing with. This will make the whole situation seem much more real.
2. Know when interest starts to accrue.
If you are waiting to pay down your student loans until interest starts to accrue, then you will want to know the exact date of when that will happen. Interest can add up quickly, and if you wait to start paying down your student loans until after interest has already been accruing for a long time, then you may find yourself paying more in interest each month than actual principal payments on your student loans.
3. Determine what your action plan will be.
There are two main ways that you can attack your student loan debt. First, is to eliminate your student loans based on their interest rate. Paying down student loans with the highest interest rates will help lower your overall debt as there will be less interest building up.
The second way is to get rid of your smallest student loan debt first. This way you can eliminate each individual loan as quickly as you can. This can be a great motivator as well since you will actually see some progress.
4. Ask for a lower interest rate.
Sometimes, you may be able to qualify for a lower interest rate. The main way to qualify is to sign up for automatic payments in return for a 0.25% interest rate cut. It’s not a large decrease, but it is something. Remember to only sign up for these automatic payments if you can actually afford this set payment each month though.
5. Pay as much as you can.
If you want to get rid of your student loans as fast as you can, pay more than the minimum payment. Pay above and beyond that amount. If you are just paying the minimum payment, then you are taking the longest possible time to pay down your student loans. You can cut years off your schedule if you pay above and beyond. Even something such as an extra $25 each month can add up and help you in the end.
6. Find a way to make extra money.
You probably recently found your first “real” job after graduation, but you may want to look into a possible part-time job or a way to make extra money on the side so that you can put all (or most) of this extra money towards your student loans.
7. Cut your expenses.
I’m sure you have some extra expenses in your budget that you do not need to be paying for. Look for these unnecessary expenses and cut them out completely. Then, apply these savings towards your student loans so that you don’t get used to this extra money and spend it on something else.