Recent Graduates: 5 Tips for Paying Down Your Student Loan Debt

According to the Institute for College Access and Success, as of 2014, seven in 10 students who graduated from public and nonprofit colleges had student loan debt. The average debt load was roughly $29,000. In the past decade, the average amount of debt at graduation has risen substantially to more than twice of the rate of inflation.

Students who have high debt amounts and who are struggling to find suitable employment may also have issues paying their student loans on a timely basis. You can use the following tips to help you pay down your student loan debt faster.

  1.     Make more than the minimum payment.

If possible, make more than the minimum payment amount. This will cut down on the interest that you must pay over time. For some borrowers, merely adding an extra $20 or $30 per month can save you hundreds and even thousands of dollars worth of interest over time.

  1.     Consider consolidation and refinancing.

If your student loans have relatively high interest rates, it may be worth considering refinancing and consolidating your loans. For those who have several loans, consolidation may also make paying your loans easier because you only need to make one payment instead of several. Refinancing, even if it just drops a few percentage points, can result in significant savings over several years. This is especially so for larger debt amounts.

  1.     Devote your extra cash to your loans.

Whenever you come into a cash windfall, such as through an insurance payment, lottery winnings, or gifts, use that money toward your student loans. You may be surprised how much these extra sums add up. If you get a raise at work, you could also consider adding the value of your raise directly to your loans. Even adding 50% of your raise can help you pay down your loans much faster.

  1.     Cut unnecessary costs.

Keeping a tight budget will allow you to devote more to your student loan payments. Living very conservatively for a few years will let you live loan-free much faster. You may want to cut back on going out to eat, cable television, or entertainment. Take a hard look at where your money is going and determine where cuts may be appropriate.

  1.     Make a payment every two weeks.

Even if you cannot cut costs or put extra funds toward your loans, you can save money on interest by making two payments a month. Simply cut your total payment in half and pay once every two weeks. By doing this, you will cut down slightly on your accruing interest, and you will end up paying one extra payment over the year. It allows you to pay more without feeling it in your budget.

Although some students may consider whether bankruptcy may be an option for them, it is almost impossible to discharge student loans. However, discharging other debts in a bankruptcy (such as those from credit cards or medical obligations) can often make meeting your student loan demands easier. If you feel like you need help managing your debt and you are considering bankruptcy, give our team a call to discuss your options.