Student loan debt is the plague that everyone can’t seem to avoid. Though we have blissful wishes of being able to pay for college debt free, the reality is that most Americans don’t and won’t.
As someone who was burdened by student loan debt, I understand the desire to pay them off quickly. After all, the sooner they’re gone the sooner you can free up your income to do things that you actually want to do.
That’s why I wanted to share some of the best tips that I’ve been able to gather from some top personal finance experts.
In this article, you’ll get their top tips for paying off your student loans quickly and practically.
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Options for Paying off Student Loans
In 2018, the student loan debt in the United States surpassed over $1.4 trillion– topping overall credit card debt in the nation.
There’s an obvious gap between what millennials in debt are making versus what they owe. So how do we close the gap?
Though you must inevitably pay off your student loans, there are a few options that can assist you if you find that they’re a bit of a burden to your income.
The following tips are additional ways that you can not only save on your overall debt repayment, but also ways to pay them off quickly.
1. Advocate for a Better Interest Rate
Attorney Ruky Tijani says that, “virtually everything is negotiable”— including those loan interest rates.
In Ruky’s case, she researched loan service competitors and called her student loan provider to negotiate a better rate.
As an attorney, one of the things that she consistently learned is that virtually everything is negotiable! When calling, she reminded them of her consistent payments over the previous year, recounted instances of her loyalty (including referrals to them), and she “closed the deal” by stating that a better rate would further incentivize her to consider their other loan products as well as expeditiously pay off her student loan.
Ruky was able to successfully lower her rate from 4.6% to 3.14%! All after one call!
2. Consider Consolidating Your Loans
Loan consolidation is always an option when paying off your student loans. It is typically done for convenience and to get a lower rate, but may cost you more money in the long run.
Loan consolidations allows you to combine multiple federal student loans into one loan, resulting in one monthly payment instead of multiple ones, according to Simon Zhen, research analyst for MyBankTracker.
Simon suggests that this can really help you stay organized and you might have access to alternative repayment plans that were not available to you before. You’ll also be able to switch your variable interest rate to a fixed rate.
However, she notes that the time to consolidate your loans is during your six-month grace period.
3. Save Money to Put Toward Debt
Here are some ways that you can save money to put toward your debt.
The #1 tip for all recent grads trying to pay off any debt, but especially student loan debt, is to find a few areas of frugality to really ramp up your debt payoff!
Richmond Howard of PFGeeks suggests taking a look at your meals to find ways to save money in your budget to apply toward your loans.
He and his wife were able to cut our food budget by $200+ a month by meal prepping.
Not sure how to meal prep? Check out this guide for help with meal prepping and saving money on groceries.
Another way that you can save money is through carpooling. With gas prices constantly in flux, this can be a great help to your cash flow.
Val of The Common Cents Club never would have guessed that as a grown, working adult she’d carpool to work with someone she barely knew. Nonetheless, she drove one hour each day and her husband drove two.
By finding co-workers to carpool with, they saved around $3,000 per year on gasoline, oil changes, and maintenance.
Get a Roommate
Housing accounts for a significant amount of costs within most budgets. That’s why Andrew Josuweit, CEO of Student Loan Hero, suggests getting a roommate as an option for saving some money.
Andrew recommends treating your debt like your house is on fire– make it a priority to get out of debt as soon as possible. That means sacrificing in the short term and finding ways to increase your income.
For example, those trying to pay off debts can move to a less expensive apartment or find roommate for a few years.
4. Make Large Payments
Making a large sum payment against your student loans makes a significant impact in your principal amount, and therefore, the total time and amount that you’ll pay on your loans.
Personal finance blogger, Danielle Desir of The Thought Card, recommends saving a large sum of cash and using that to make a large one-time payment towards your debt.
One of the benefits of making large bulk payments is that since your principal is being reduced dramatical, it will lower your daily interest amount. So overnight you can go from paying $8 in interest a day to $6 a day. That’s a saving of $60 a month!
Below are a few ways to save up money for that lump sum payment.
5. Utilize Tax Deductions
Kyle of The Millionaire Mob suggests taking the student loan tax deduction and reserve that portion to pay off more debt. This is one of the most straightforward creative ways to pay off your student loans.
If your income doesn’t exceed certain limits, the student loan interest of up to $2,500 can be deducted from your federal tax returns. It is possible to take this deduction even if you don’t itemize.
Kyle’s recommendation is to find out whether your income tax bracket qualifies for a deduction and claim it. The deduction can significantly reduce the amount that you’re paying in interest. It is a creative way to pay off your student loans and can save you more money.
6. Enlist the Help of Family & Friends
You can also list the help of family and friends, according to Robert Farrington of The College Investor.
He recommends making it easy for your family and friends to help you pay off your student loans. For example, when your parents ask you what to get you for Christmas, ask them to help with your loans instead of giving you another sweater you’re not going to wear.
You can use apps like PickPocket.me that allows you to set up “backers” – basically they can easily send payments towards your loans online, with no hassle.
Daniella Flores also suggests setting up ‘auto save’ in an app like Digit or on your online banking and naming it ‘Loan Fund’. Trickle money in there every day, week, or month for extra cash towards loan payments.
Try doing this for Christmas and your birthday! Every little bit helps.
7. Increase Your Income
With there being an obvious gap between the average student loan debt and the average salary, increasing your income if a necessity for getting rid of student loan debt.
Here are a few suggestions for how you can bring in a bit of extra cash to support your effort.
Flip Items for Profit
He went online and found out what games were rare or in demand on various consoles. Then he would go to yard sales and flea markets looking for those games.
When he would find them, he would barter with the seller and if he was able to get a deal, he bought the game and then resold it online for a profit.
Doing this helped him to pay down close to $2,500 on his student loans.
Jon believes that you can do this as well. You just have to figure out what interests you and then learn what is valuable and how to resell it for a profit.
Get a Side Hustle
If you don’t already have one, I would suggest picking up a side hustle to bring in extra income for your debt.
While paying off my own loans, I did a hodgepodge of things to bring in extra cash. If you want to make a consistent dent in your loans, I suggest also picking up a side hustle that works for you.
The key, however, is developing something that works with your schedule and has a positive return on investment. That means, there is a low time equity for a high monetary return.
Don’t waste your hours away on something that will cost you more to run or do than the profit that you’ll receive.
Final Thoughts on Paying off Student Loans
Paying off your student loans can definitely be intimidating. However, with the suggestions provided above, you have a starting point.
The truth of the matter is that although there are millions of people who are still in debt, there is also a large population who have managed to get to the other side and obtain debt freedom. You can pay off your debt too!