Anyone with student loan debt will tell you just how tiring, worrisome and stressful it can be. It’s easy to panic or avoid them altogether. But really, the best (and only) way to deal with them is like ripping a band-aid off – you just have to get a firm grip and face them head on.
Student loan statistics are sobering: the average student loan debt for Class of 2017 graduates was $39,400, not to mention that we owe over $1.48 trillion in student loan debt among about 44 million borrowers*. Those numbers are dizzying at best.
Besides having a budget, it’s important to have a plan of attack. Use these tips to find the best way to tackle those student loans once and for all.
Know what you owe on your student loan debt.
You can’t create a plan of attack without knowing what you owe. Create a spreadsheet that lists:
- The number of loans
- Which provider they’re with
- The interest rates on each
- Minimum monthly payments
- Type of loan
- Contact information for each provider
- Login information
Having everything pulled together makes it easier if/when you have to call the student loan provider in order to discuss payment schedules or how to apply extra payments.
Prioritize your student loans and focus on paying off the smallest first.
By prioritizing the smallest loan first, you’re using Dave Ramsey’s snowball methodology. Psychologically, you want to create easy wins to keep you motivated. Focusing on paying off that loan first will help you to create motivation and focus during your repayment process.
Automate your minimum payments (or more).
When I signed up for automatic payments, my student loan company offered me a 0.25% discount as long as I kept the auto payment going. Ask your loan company if they’ll give you a similar offer. If nothing else, you know that by signing up, that you don’t have to worry about missing payments.
Pay beyond the monthly minimums.
The average monthly student loan payment is $351*. We all know that the only way you’re going to get these student loans paid off anytime this century is to pay more than what’s due every month. The important thing is to make sure it’s being applied correctly.
It bears repeating:
Make sure that your extra payments are being applied correctly.
So what does this mean? That you want the extra payments to be applied to the principle, not the interest. Student loan interest does accrue daily, so that will always get paid first. But, when you make an extra payment, you can choose to apply it to the principle, OR you can choose to “pre-pay” the interest that’s coming up (not the daily interest that’s already accured).
Of course you want to pay the principle first. When you do that, you have less of a lump, which means the interest you’re paying will drop.
Some student loan providers are sneaky and ridiculous with this. When you make a payment, if you aren’t given the option of how it’s applied, you’ll need to call and stay on them to make sure that they apply it correctly.
Make bi-weekly payments.
This is a well known trick for paying off mortgages faster. Instead of making a single monthly payment, do half of the owed payment every 2 weeks. Since there are 52 weeks in a year, you end up with an extra payment being made, as well as less interest accruing.
While I haven’t personally done this, you would would pre-pay half of March’s payment on Feb 15th, and then the rest on March 1st. That way you’re not late with payments, but also paying less interest overall.
Consider consolidation or refinancing your student loan debt.
Only consider consolidation or refinancing if it makes sense. Look at all of the options and compare them before taking the leap. I was able to hit the timing just right to consolidate my student loans at a crazy 1.75%, which is unheard of today. Make sure to do your research and know what you’re signing up for before making the commitment. There are some great articles that can help you make the decision, such as the calculators on Student Loan Hero.
Look into student loan forgiveness.
Student loan forgiveness is generally based on your occupation. You’ll need to make sure you work for the correct type of company and job, and apply ASAP. It takes 10 years to achieve loan forgiveness, so you want to get the clock ticking as soon as you can. Also, don’t forget you’ll have to pay taxes on whatever amount is forgiven, so prepare yourself for that as well. For more info on student loan forgiveness, check out the Federal Student Loan website.
Also, make sure to beware companies that say they’ll help you get your loans forgiven. Often they’re scams. While student loan forgiveness is very enticing, make sure to be on the lookout for companies and deals that are too good to be true.
Ask your employer for help.
Check and see if your company offers any Loan Repayment Assistance Programs (LRAPs). This is a newer benefit that some companies are offering to help gain and retain employees. If you’re current company doesn’t offer a LRAP, maybe it’s time to research companies that do and consider a career move.
Also, some employers offer help with financial services as a benefit. Take advantage and talk to a financial adviser to figure out what your options are to get these loans paid off quickly.
Set smaller milestones and goals.
By creating smaller milestones, you can use this to keep you motivated and ensure you keep on track. Break up your goals by percentage amounts or by individual loans. Every time you reach a milestone, make sure to celebrate in some way. It’s a great way to help you keep going, and recognize your progress!
Have a visual reminder.
Use a debt repayment tracker printout to help you keep a visual reminder. Put it in a place where you’ll see it often and it’ll remind you of your goals. It’s a great way to keep your motivation up and watch your debt shrink. You can download one here:
Printable Debt & Savings Trackers Just for You!
Use these free debt & savings tracking printables to help you track and achieve all of your financial goals!
Hustle your way to student loan freedom.
Find a side hustle that fits your schedule and use it to earn extra money. You can do anything from online surveys to walking dogs to picking up extra overtime at your current job. For more ideas on side hustles, check out:
- The Ultimate List of Best Side Hustles that Aren’t MLMs
- How to Make Money Online: 50+ Brilliant Ways to Make Side Money Now
Review how you budget and use your money.
Chances are there are chunks of your budget that could use trimming down, and the extra thrown on those student loans. The easiest way to find extra money is to dig into what you already have and repurpose it. Here are some easy wins to get you started:
Use your credit card (responsibly).
Believe it or not, there are credit cards that allow you to use your earned reward points to pay off the principle on your student loan. Sounds amazing, right? As long as you pay off your card in full every month so that you’re not paying interest on that, this could be a win-win. For more info, check out bankrate.com ‘s article here.
Update your thinking about how you spend.
Use the money that you’re making wisely. The more you save, the more you can apply towards that student loan debt. Consider the following to help you trim your savings:
- Consider buying used vs. new
- Use Trim to cut your phone, cable and other bills. Or, drop cable altogether!
- Switch to Straight Talk to save even more on your phone bill
- Switch to a cheaper grocery store
- Start couponing
- Carpool, bike or use public transit to work
- Review and adjust insurance coverage
- Reconsider what’s a need versus a want
- Find other ways to cut your expenses
Meal plan to cut your grocery budget.
For us, the biggest piece of our budget that was the easiest to cut was our food budget. Having an extra $400 a month to throw towards student loan debt was priceless, and we did it by using the Grocery Budget Makeover. Erin Chase is the creator of $5 Dinners, MyFreezEasy, and Grocery Budget Makeover, so she definitely knows what she’s talking about!
With the Grocery Budget Makeover, you learn a lot of key ideas about organizing, budgeting, and shopping:
Include your family in the process
Set up your shopping list,
how to stockpile,
how to best use coupons (only if you want to!)
time saving kitchen hacks.
Learn more about the Grocery Budget Makeover course here.
Consider pausing retirement/savings.
Pausing retirement or savings is a very personal choice and is going to vary based on your specific situation. If you have an employer matching 401k contributions, I would not stop that contribution because it’s free money.
On the other hand, if you have a high interest rate loan, such as credit cards or student loans, it makes sense to pause other retirement contributions or low interest savings until you have those loans paid off. Make sure to do your research and figure out the savings/earning in the long run to figure out what’s best for you specifically.
Put any extra money towards your student loans.
Think of all the extra money that comes your way every year: raises, bonuses, gifts, tax refunds, overtime…the list goes on. Vow to use 100% of those extra earnings towards your student loans to knock those balances down much faster. You’ll be happy you used it on your student loans instead of a fancy dinner or extra stuff you don’t even need lying around the house.
Student loan debt doesn’t have to be a crisis or a struggle. If you make it a point to get organized and throw everything you can at it, you’ll have your student loan debt paid off in no time!