For an entire generation, excessive student loan debt is like a millstone chained around one’s neck. With so much debt hanging over their heads just as they start out in the working world, many of today’s recent graduates want to know how to pay off student loans quickly.
Because the amount of debts we’re talking about are typically very large, there’s not quick shortcut to getting out from under them; even bankruptcy is not an option for student loan borrowers.
There are, however, some basic principles that can help borrowers pay off student loans a bit faster:
- Live small. Many recent graduates want to live the same kind of lifestyle their parents have the same lifestyle they had before they went away to college. That’s simply not an option. Your parents probably had some lean years when they were starting out, and so will you. You’ll need to rent a cheap place, drive a used car, and eat a lot of ramen noodles. Don’t expect to get into a mortgage or new car loan without wrecking your debt repayment schedule.
- Get counseling. If you need it, there is financial counseling is available for student loan borrowers.
- Create a budget. You have to structure your spending and manage your income so you have enough money left over to put extra toward your student loans every month. Creating a written budget is the best way to find extra money to get those debts paid off quickly.
- Put all extra money toward debts. If you get a gift, a tax refund, or any other unexpected income, put it toward your student loans immediately. The quicker you put that money toward debts, the less likely you are to spend it frivolously.
- Don’t count on student loan forgiveness. Even if the government can agree on some kind of student loan forgiveness plan, it won’t relieve you of the debt you owe toward your education. The most you can expect is some relief from accumulated interest. That might help, but you’ll still have to focus and work hard to pay off your debts. Don’t let any potential future action from the government impact your debt repayment today.
- Set up automatic payments. Have a portion of your income automatically transferred from your bank account toward your debt payments. Don’t let that money sit there, begging to be spent. If the money gets sent automatically, you’ll never miss it; and you’ll never be late on a debt payment. After your debts are repaid, keep using this technique to establish emergency savings funds and pay off other debts.
If you are in need of financial counseling, you can find an NFCC certified member agency near you to get started today!
You can visit Springboard’s website at www.credit.org.
Views expressed are the personal views of the author, and do not necessarily represent the views of the National Foundation for Credit Counseling, its employees, its members, or its clients.