Student loans are pretty much the standard these days. The statistics are enough to make you want to curl up in a ball and never leave the house again, and they are certainly enough to make you reconsider encouraging your kids to go to college one day. In fact, it’s alarming just how many people graduate with student loan debt, what the average amount of student loan debt per student really is and how many graduates aren’t even using their degree in their current line of work.
- More than 40 million graduates have accumulated student loan debt
- More than 7 million borrowers have defaulted on their student loan payments
- Student loan debt has increased more than 500 percent in five years
- The average student loan debt for each graduate is approximately $35,000
Am I right in saying that you’re sufficiently depressed at the moment? The student debt crisis is one I’m not sure we will ever get over. The problem is that student loans can make you unemployable, some people can even lose their state licenses and driver’s licenses if they default on their student loans and many people will never feel financially secure enough to start a family, buy a home or get started on real life when their student loan debt is eating away at them month after month.
You see, it’s easy to get into debt as a student. Many students are unaware of precisely what agreeing to the terms of each loan means. At the end of the day, student loans are a way for many students to pay for tuition and books (both very expensive and continuing to be even more so as the days go on) without worry that they have to pay them back right away. Many defer their payments until six months post-graduation and then end up shocked and horrified when they realize how much they’ve borrowed, how much interest they’ve accumulated and how much their payments are on each loan. It’s gut-wrenching.
For many, forbearance, deferment and income-based repayment plans are the only option for paying student loans. However, that only prolongs the length of time it takes to pay back these horrific balances, which makes life that much more difficult that much longer. For some college grads, some very unique and very interesting methods of payoff have come in handy over the course of the past few years. We’ve taken some advice from recent grads on how they have nearly paid off their student loans in only a few short years. I will warn you that it’s not easy, it requires dedication and it’s going to make you feel even worse at first. However, once they are paid off and you are in the financial clear, you’re going to feel far better about your student loans and the methods you’ve taken to pay them off. Here are the pretty simple ways some recent grads have paid of tens of thousands of dollars in student loan debt over the course of the past few years.
Look for Unconventional Means
Everyone can work a job all day long and make money that way, but there are so many other ways to bring in income to supplement that. Sure, you can get a secondary job tending bar or working at a retail location, but why do that when you can earn passive income to help you pay down your student loan debt? Natasha Flores is a student from the University of California who has more than $25,000 in student loan debt. She rents out her apartment through Airbnb and stays with her friends and family. She earns at least $500 per month, but usually more like $2,000 per month for doing this, and she applies that toward her student loan debt.
Take on Freelance Work
Most graduates do not leave school with their diploma and end up with a six-figure income. Most start at the bottom and work their way up, and it takes time. When you begin working making a modest salary, it’s impossible to pay back student loans by paying more than the minimum. For that reason, many recent grads have taken up freelance work as a way of paying down their student loans. Tanner Roman, a graduate with more than $82,000 in debt after graduation took up a freelance music gig producing videos and audio engineering jobs in addition to his full-time job in the Nashville music industry. He paid the standard $500 minimum payment each month in addition to another $1500 per month with his freelance income so that he’s always paying a minimum of $2000 per month toward his loans. In less than two years, he’s paid off more than $70,000 of his student loan debt.
This type of concept requires you are dedicated to spending your additional income on your student loans. It’s easy to fall into a trap of making only the minimum payment and then using your additional income as a means of purchasing a home or doing other things you’ve always dreamed of doing. However, Tanner will soon be completely debt-free and able to spend his freelance income on anything he wants in life, and he’s not too unhappy about that prospect.
Find a Motivational Tactic
All the financial experts are going to agree that the most profitable thing you can do to pay off your student loan debt is to pay off the loans with the highest balance first. What others will tell you to do is simply ignore that advice. It might not work for you, but it worked for Lindsay Broome. She graduated school with more than $50,000 in student loan debt, and she and her husband decided that with two small kids at home, they needed to do something fast to motivate them to pay that debt off as quickly as possible – so they did. They tackled Lindsay’s smallest loan first.
When she was able to cross that loan off her list of debts to pay, she felt accomplished and proud. In doing that, she was able to pay off the next one and the next one and so on until she and her husband were able to send in that final payment for that final loan – 10 loans in all. Now she is debt free and it took her less than five years to become debt free. Her loans are paid off and she’s living life to the fullest at the moment.
Continue to Live like a College Student
What’s another year or two eating Ramen noodles and taking in dollar movies while living like a college student even though you’re part of the real world now? Eric Garvey, a Minneapolis native, does just that. With more than $128,000 in student loan debt after graduated with his Master’s Degree, he decided he had to do something drastic to pay down that massive debt. Garvey did what he’d been doing for years in college; he lived like a college student a little bit longer.
He turned off his cable, cut his monthly expenses as much as possible and basically lived a minimalist lifestyle for the past five years since he graduated in 2010. In doing so, he’s managed to bring down his debt to less than $71,000 in only five years. Instead of spending more because he was making more, he simply applied the money he was earning in addition to what he earned as a college student to his loans. It won’t take him much longer to pay off his student loan debts and live a debt-free lifestyle.
When Zak Hill-Whilton graduated in 2010, he did so with more than $100,000 in student loans. He states that, like many college students at the time, he had no idea he’d accumulated so much debt throughout his college career thanks to the fact that he had gone ahead and accepted financial help when it was offered. However, he did just that. He decided that he had to do something in addition to his regular job if he ever hoped to pay down the balance of his loans. He took a side job in the evenings and he uses that money to add to paying his student loans off in a more timely and less expensive fashion.
However, he doesn’t apply all his addition income to his student loans. While that might work for some, he has found that setting some aside for himself has been what’s kept him on track. When he feels as if he is depriving himself, he’s less likely to spend money on his loans. Instead, he likes to do things that are important to him, so he sets aside a little each month to make room in the budget to do just that. It allows him to feel accomplished and as if all his hard work is not for nothing. It might not be the way you want to pay down your student loan debt, but it’s worked for many college grads to pay down their loans and still enjoy their lives.
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