Student loans are a hot topic these days, with everyone wondering the same thing: How are current college students or recent college graduates going to repay theses debts?
While millions of Americans have been navigating these waters for years, new graduates may be nervous about the total bill for their degree. Education is still a wise investment to make, and paying these loans back is very doable.
Here are a few tips to help you manage your student loans and keep them from overwhelming you:
Choose a career field that will pay you back
For those who aren’t 100 percent sure what line of work they want to go into, a career in public service can be rewarding, in more ways than one. No only will you get the benefit of the opportunity to improve your community, but working for a local, state, or federal government agency makes you eligible to apply for the Public Service Loan Forgiveness Program. If you qualify, some of your student loan debt may be forgiven. Additionally, since the public sector is about to experience a mass exodus in the form of baby boomer retirement, there’s predicted to be millions of vacant jobs in the coming years for millennials to fill.
Add a little to your monthly payment
If and when you can afford it, add $10-20 to each monthly payment you make. This amount will be applied directly to your principal amount, as opposed to paying off some of your interest. This also creates a small avalanche effect of its own, since reducing the principal amount also reduces the interest accrued.
Get a part-time job
It’s not ideal, but if you’re already employed full-time, and your loans are still overwhelming, there might be some part-time jobs out there that can help ease that burden. The side-hustle economy is booming, and there are hundreds of jobs out there that can be done on your own time and at your own speed.
Expand your job search
If you’re not finding full-time work in your area that pays enough to help you manage your student loans, consider expanding your job search… across the ocean. A lot of other countries, such as Japan, Korea, and China, are looking for native English speakers to educate students. These jobs pay well and often offer paid room and board, so you can send as much money home to your student loans as you want.
Cut out wasteful spending
Instead of buying a morning cup of coffee every day on your way to work, make your coffee at home instead. At the end of each month, calculate the money you didn’t spend on daily coffees (or other similar luxuries) and consider adding that amount to your student loan payment that month.
Consolidate your loans
Professional loan consolidation or credit repair may be a good option for those who have multiple loans from various lenders, and may be paying several different interest rates. Loan consolidation can be done in a variety of ways, but if you’re not sure where to begin, a specialist can help you.
Find employers that offer tuition assistance
Many different industries that didn’t exist twenty years ago have taken root in America, and they’re looking for the best talent, which makes them competitive with their benefits packages. Many employers will now offer tuition assistance or reimbursement. Try asking a new or prospective employer if they would consider putting this in your benefits package. The worst they can do is say no!
Apply the ‘avalanche’ method
If you have multiple loans, make the largest payment to the one with the highest interest rate each month, paying it down in a shorter amount of time. When this is paid off, move to the next highest interest rate, then the next, and so on. While already a popular method of paying off large sums of credit card debt, this can also help those who have multiple loans at varying interest rates.
Refinance through a different lender
If all you want is to simply lower the monthly amount of your student loan payment, try refinancing through a different lender. New loans generally get lower interest rates, so take advantage of this.
Bump your payments incrementally
During the first year of student loan repayment, you may not be able to pay more than the bare minimum due, and that’s ok. But if you get a raise, and you can afford it, use the raise to bump up your payment a small amount. Do this every year and before you know it, you’ll cut months or even years of repayment off your loan.
If you’re concerned about your credit, you can check your three credit reports for free once a year. To track your credit more regularly, Credit.com’s free Credit Report Card is an easy-to-understand breakdown of your credit report information that uses letter grades—plus you get two free credit scores updated each month.