When I started college, I immediately started to educate myself about the college admissions process. I wanted to get out of high school and into college as fast as possible, no matter the cost. By the time I could apply, I had my essay, recommendations, and applications done on time.
What I didn’t do enough of was research into college financing.
I had no idea how to pay for college, what kinds of programs were available to pay for college, or what the ramifications would be for my ignorance.
Consequently, I wasn’t educated at all about the FAFSA, subsidized loans, unsubsidized loans, Pell grants, scholarships, or anything else. My parents weren’t college grads, so they weren’t able to walk with me on this journey. Educators probably thought my parents would be there to figure it out with me, so I don’t recall any program in high school to help with admissions or financial aid.
Caught in this catch-22, I did my best to fill out the FAFSA on my own. Whatever financial aid I was awarded in the form of grants and loans covered the cost of my tuition, books, and provided a little for living expenses. I qualified for a work-study program, which combined with a part-time job at a grocery store, made it possible for me to afford to live in an expensive college town.
Upon graduation in 2006, I had about $20,000 in student loan debt. Not bad when you consider that the average college student graduates with nearly $40,000 in student loan debt today.
Several years later, I pursued a master’s degree. Total loan debt ballooned to more than $36,000.
Student loans are ubiquitous, right? Everyone has them and there’s no way to avoid them.
If you’ve somehow stumbled on this post while conducting research for college and you don’t have student loans debt, that’s great news. Check out a resource like Road2College to gather more information about college financial aid, especially scholarships. Apply for every scholarship you can find so you can graduate debt free.
If you’ve already graduated with student loan debt, I hope these tips will be helpful to you as you work to pay off your debt as fast as possible.
1. Don’t buy a brand new car when you get your first job after college.
When you go from making minimum wage to making $40,000 a year, it can be tempting to buy a new car. Wait a couple of years until you crush that student loan debt. Chances are, you might qualify for a promotion after a couple of years, so you can reward yourself with a new-to-you car (paid for with cash!).
2. Figure out how much money you owe and to whom.
Depending on when you graduated and how many times your loan servicing company has changed, you might have to pull your credit report to find out exactly how much you owe and to whom. (I had to do this because my loan servicing company changed a couple of times while I had student loan debt.)
Put together a list of all your student loans and their interest rates. Use Unbury.me to figure out how you should repay those loans, either via a debt avalanche or a debt snowball.
3. Decide when you want to be out of debt.
Don’t let the repayment schedule dictate when you get out of debt because the repayment schedule wants you to be in debt for 10-20 years.
When you want to get out of debt is, in part, based on the action you take to improve the situation.
Let’s say you pay $500 a month on your student loans and you think you’ll be out of debt in two years; not too bad, right? How awesome would it be if you doubled your payment and paid off your student loans in one year instead? Pretty awesome, I bet!
4. Create a bare bones budget.
If it’s not a necessary living expense, consider cutting back temporarily. Chances are, your bare bones budget might resemble life in college. It’s the kind of budget that doesn’t have any fat.
No weekend trips. No brunch (until you’re debt free). 🙂
Ramen noodles. PB&J. House hacking.
It’s the kind of budget that says, “I want to get out of debt as soon as possible and am willing to make temporary sacrifices to make that happen.”
5. Get a second job or a side hustle.
Again, this is temporary. The more you work now, the less interest that accumulates, so you can get out of debt faster. (Use Unbury.me to see how extra payments reduces the interest you’ll pay.)
6. Find others in the same situation.
Maintain motivation by leveraging the power of a community of people who want to get out of debt. When you’re feeling down or you want to celebrate a milestone, post a message to the group. Getting out of debt is easier when you have the support of like-minded friends or family (or from our Facebook Group).
Get more tips and tricks when you join The College Investor’s Student Loan Debt Movement. You might even win $500!