College has ended. You’ve donned the cap and gown, walked the aisle, and now have your degree in hand. You are ready to face the world, get that grown-up job, and build your future… Except for one, small—or oftentimes, very large—thing. You’re exiting that university with a big bill you have to pay: your student loans.
You are not alone. According to the credit reporting service, Experian, 40 million people have at least one student loan with the average debt of $29,000.1 Joining the ranks of borrowing in order to get you through college may have seemed like a good idea at the time, but graduation day (or soon after) the debt you face looks daunting.
Like any other financial challenge in life, your next step is to make a plan. Approach it like you did your degree, one class at a time. But expect this: it won’t be easy or pain free. What it can be is liberating! When you get that debt paid off it will bring you a great sense of accomplishment.
So here are a few things you might want to incorporate into your plan of paying off the debt:
1. You may want to look into loan forgiveness programs that come through career-specific government jobs.
Before you take that option, remember there will still be some debt that you will be required to pay and the job you take may pay much less than a comparable position in the general market…so you might not come out ahead. Just do the math before you take this route!
2. Take a look at your overhead.
Do you have a car payment? Pay too much in rent? Sell that car and get something less, move to a cheaper place, and take the money you’ve saved and make the largest payments you are capable of—addressing the interest while at the same time reducing the principal.
3. There are debt consolidation organizations that can help you consolidate your loans to reduce their overall costs.
The organization, Consumers Advocate, lists a few you may consider. But as in everything in life, check out a consolidation company’s track record, read the paperwork, and have someone you trust read it with you and do the math!
4. Start with the littlest loan and pay it off first.
The smaller loans may not be at the lowest interest rate, but sometimes you need a small win to feel like the bigger win is achievable. Dave Ramsey calls this the Debt Snowball Method and has shown it can work in any debt scenario.2
5. Get a second job.
Yes, work more hours to pay this off. You could park cars on weekends, wait tables, or do data entry on your home computer. Just create another source of revenue to specifically apply to the student debt.
6. If you’re married, live off of one salary and apply the other one to clear off the debt.
This is an ambitious plan, but it’s one way to master the challenge quickly. Also, if you commit to this, not only will you accomplish the goal, but your marriage will grow stronger by tackling it together.
Whatever your plan is, make one. There is no easy way out of student loan debt, even in bankruptcy student loans are excluded and cannot be dismissed.
This really isn’t the worst thing in life, although some days it may feel that way. You can pay this off; you can get this behind you and move on toward the future you envisioned if you just make a plan and execute. Like all other challenging things in life, you will be very thankful you did.
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