Student loan debit is one of the most significant aspects of contemporary American financial life. According to The Economist, total U.S. student loan debt surpassed $1.2 trillion in 2014, and over 7 million borrowers are in default. There are approximately 44 million people with student loans who have an average outstanding loan balance of $37,172.
Student loan debt now exceeds auto loan and credit cards as America’s largest personal debt burden. The cost of education has been going up rapidly!
BUT, there are options to deal with this. At Green Path, they strive to guide you through the various aspects of financial wellness, and student loan debit is no different.
Here are some proven strategies they have discovered for taking student loan debt head on:
- Pay more than your monthly payment – It doesn’t have to be a crazy amount extra. Start out paying an extra $20 each month, and slowly increase that number over time.
- Consolidate and refinance – In recent years, consolidating and refinancing student loans through private lenders has become more and more popular. Many of these private lenders offer attractive interest rates, particularly for people with graduate student loans, which can significantly decrease monthly loan payments.
- Apply your raises – If you get a raise at work start applying 50% of that raise directly toward your student loan debt. You can do this by setting up a savings account that is specifically for debt repayment, or by paying extra on your monthly payments.
- Set up automatic payments – Automatic payments take all the guesswork out of student loan repayment. They also eliminate the possibility of missed payments, fees, and unnecessary interest charges. Additionally, many loan providers offer a 0.25% discount on your interest rate if you sign up for automatic payments.
- Pay every two weeks – Rather than paying monthly, try splitting your monthly payment in half and paying that amount every two weeks. This eases the pain of each payment, and you end up paying the equivalent of an extra monthly payment each year. Over time, this can shave years off of your debit repayment.