Colleges are very expensive, that’s why millions of Americans cannot afford the cost of getting a post-secondary education without taking out a student loan.
With student loan debt totalling a record $1.56 trillion, and individual debt averaging at about $32,731, it’s understandable why so many people are experiencing financial hardship and living paycheck to paycheck. Many people regard their student loan debt as a serious financial hurdle.
Unlike other forms of debt that might go away with a bankruptcy filing, your student loan debt is here to stay.
So how do you deal with student loan debt in a way that it’s not a drag on your finances? Well, here are nine tips to help you do just that.
1. Sign Up For Automatic Payment
Most private student loan companies will lower your loan rate by between 0.25% to 0.50% if you sign up for autopay. The Government also provides a 0.25% discount for student loan debtors who enroll in automatic payment.
A 0.25% reduction in your APR may sound trivial but depending on how much money you owe, it can be significant.
For example, a 0.25% APR reduction on a $100,000 loan is equivalent to $250. Imagine what that amount of money can do. It can pay your Netflix ($107.88/yr @ $8.99/month) and Amazon Prime ($119 per year) bills for the year, and you’d have some change left over.
Alternatively, you can use the savings as payment on your loan principal.
Call you student loan company and ask if they offer APR reduction for autopay.
2. Take Advantage Of Grace Period
Most student loans will give you a post-graduation grace period, after which time, you’ll have to start paying your loans.
Most lenders, including the Federal Government, will give you a grace period of between six to nine months. After that time, you’ll have to start paying up.
You can use the money saved up during the grace period to pay down on your student loan principal. You can also use it to undertake other projects that you otherwise wouldn’t be able to do were you making those student loan payments.
3. Ask Your Employer To Pay Your Student Loan
Many companies out there will pay a portion of your student loan debt. Some companies will offer to contribute $2000 a year towards your student loan debt, with lifetime contributions capped at $10,000.
Others, especially those that recruit students from campuses, may offer to pay the entire student loan debt.
Ask your employer what offers they have for those with student loan debt.
4. Take Advantage Of Loan Forgiveness Programs.
If you are employed with the government (federal, state, local, tribal government or not-for-profit organization) you may be eligible for a Public Service Loan Forgiveness (PSLF) program.
The PSLF Program forgives the balance on your Direct Loans after you’ve made 120 qualifying monthly payments under a qualifying repayment plan while working full-time for a qualifying employer.
Check out this US Government website for more information on the subject.
5. Live On A Budget
One reason why many people struggle financially, regardless of how much money they make, is because they don’t have their finances planned out–they don’t have a budget.
A budget will give structure and purpose to how you spend your money. It will also help you prioritize the things that are most important to you.
Your budget can also help you to save money that you can then put towards the principal on your student loan.
You don’t have to use a spreadsheet if you don’t want to. There are many budgeting apps out there, and one of the best ones is YNAB (You Need A Budget).
YNAB is built on a zero-based budgeting method in which all expenses are accounted for. With this type of budgeting, every single dollar is allocated to a specific purpose, or as they say at YNAB, every dollar has a job.
[READ: 10 Best Budget Apps On The Market Today]6. Consider Deferment And Forbearance For Your Student Loan
If you are still unemployed after your grace period, or if you lose your job for some reason, you can request a deferment of your student loan.
If yours is a government loan, you can call and find out if you qualify for deferment. Most times, you will.
For private lenders who don’t offer deferment, you can explore the possibility of forbearance. Forbearance, however, will increase the amount you owe. Deferment, on the other hand, can be interest-free — especially for certain types of federal loans.
[READ: 15 Amazingly Simple Ways To Pay Your Debt]7. Enroll In Income-Driven Repayment.
Enrolling in an income-driven repayment plan will help set your monthly student loan payment to an amount that you can afford based on your income, family size, and other matrices.
The Federal Government offers four different types of income-driven repayment plans:
- Revised Pay As You Earn Repayment Plan (REPAYE Plan)
- Pay As You Earn Repayment Plan (PAYE Plan)
- Income-Based Repayment Plan (IBR Plan)
- Income-Contingent Repayment Plan (ICR Plan)
There are varying terms and conditions for each of these plans. Here are some resources to aid your research.
8. Pay More Than The Minimum Required
Paying more than the minimum requirement will save you in interest payments over the long run. The sooner you pay down your loan, the more money you can potentially save.
One of the easiest ways to tackle this situation is to allocate a portion of your earnings from each paycheck to pay on your loan.
You can also get a side job to supplement your income and help pay down the loan.
Flexjobs is a platform with thousands of work-from-home jobs, online jobs and part-time jobs. Sign up with Flexjobs and find a job you can do from the comfort of your home.
[READ: 4 Easy ways To Stop Living Paycheck To Paycheck]9. Consider Consolidation And Refinancing Your Student Loan
Take advantage of lower interest rates and refinance your loan. There are many student loan refinance companies that will work with you. Some of the more reputable refinance companies are as follows:
It doesn’t matter whether yours is a government or private loan, both can be refinanced.
When you refinance your loan, ideally, you want to get a lower APR, better terms, and a lower monthly payment. Though the difference in the rates can seem small, over the life of the loan, the savings can add up.
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