Address Your Student Loan Debt
Currently, the average American household with student debt owes about $49,000. Graduates in their twenties spend more than $350 per month on average on student loan payments and interest. Since the average entry level job was worth about $50,000 a year in 2016 for new graduates, truly average college grads in America can expect to see their earnings garnished by between eight and 10% for roughly 10 to 12 years after they graduate.
Before this becomes you, you need to understand how you can pay off your student loan debt quickly. With the rising cost of education and increasing interest rates, if you decide to go to college, you may carry significant debt for your education once you’ve completed it. It is crucial that you develop a plan for repaying your student loan debt so that you won’t have to carry this burden for decades.
There are a few steps you can take to reduce your burden. The steps have specific activities that must be taken it to address your debt. After you’ve done everything, you can click on the links below to go to download tools that are customized to help you.
The first step is to understand your debt. Getting a clear understanding of where you are involves several different things. The first thing you should do is complete your school’s exit counseling process. If you’ve taken federal student loans, the school is legally required to undertake this activity when you graduate or decide to leave school early. This can be done in person by mail or online. There are specific things that are included during this exit counseling.
- Your legal rights and responsibilities as a borrower.
- Various available repayment plans.
- Procedures for making payments.
- Conditions that must be met for deferment, forbearance and forgiveness.
- Resources available if you have questions or concerns regarding your debt.
This initial information can help you develop a plan for how you can and will repay your student loan debt. You must understand that it is your responsibility to pay your student loan debt. This is important because some borrowers do not believe they have to repay their student loans if they do not graduate. This is untrue.
Now, the next step is understanding how much you owe. The amount that you owe will depend greatly on the amount of time you were in school, the number of loans you’ve taken, and whether you took federal, private, or both kinds of student aid.
Finally, you will need to know which company is servicing your student loans and when you are required to start making payments.
The next thing you must do is look at your repayment options. This is a critical step and can help you alleviate much of your burden. Before looking at the possibility of consolidating your student loan debt, you should understand that the smaller your payments, the longer it will ultimately take to pay them off. Therefore, based on your priorities, you may want to increase the monthly payments or keep it at a manageable level based on whether you like to accelerate your payment schedule. One of the best options is a graduated repayment schedule if you think your salary will increase over time. You can always extend your repayment timeframe if your salary does not increase or if you experienced an unexpected financial burden. Finally, use forbearance or a loan deferment program if you experience a justifiable financial hardship, decided to pursue additional education or enlist in the active duty military. There are other ways to defer your loan payments that we will cover in the downloadable student loan burden relief tool. Finally, make a commitment to repay your student loan debt as quickly as possible. Since there is usually no early repayment penalty, you should develop a strategy that includes making additional principle repayments if you can afford to do so.
Understand that if you make principal payments, that reduces your overall interest burden on your student loans. We have provided a link to our budgeting tool, which will allow you to develop and stick to your budget. This is likely the most important factor to help you quickly and effectively repay your student loan debt. Your budget will include suggestions for increasing your income, reducing other debt, and applying these additional funds to your student loans. Don’t forget to seek assistance in repaying your student loan debt, specifically from your employer or through enlistment in the military or some other option, if you need this help.
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