For many young adults, this debt is holding them back. Having to carry debt through their 20s can prevent young people from doing various things, such as buying a home or a car, starting a family, or moving to a new state.
However, you can get rid of your student loan debt very quickly if you follow a few easy rules. Here are six tips to help you pay off your student loan debt before you turn 30.
Don’t take the easy way out
There are thousands of desperate students and graduates who are looking for an easy way to clear their debt, which has resulted in various online scams. Scammers often target people who are financially insecure and desperate, so worried graduates are a great target.
If you find a repayment plan online that sounds too good to be true, then it probably is. Recently, the Consumer Financial Protection Bureau ended a student loan repayment scam in the U.S. where scammers stole money from hundreds of graduates. Remember that honest student loan debt relief organizations will never ask you for money up front.
Focus on the interest
When people actually sit down and calculate how much money they’ll pay in interest over time, they’re often shocked and dismayed. Take some time to calculate how much interest you’ll pay if it takes you 30 years to pay back your debt, and then calculate how much interest you’ll pay if you pay your debt back in 10 years. The difference will be remarkable, which will motivate you to get rid of that debt quickly.
Work for the government
People who work for the government are often offered loan forgiveness schemes, so part of their debt is paid off by their employer. This means you can save thousands of dollars each year (some jobs even pay off up to $10,000 of debt each year).
Being in the military means that individuals go to college for free, but there are other jobs that also offer government loan forgiveness programs, such as teaching, working for the government, or joining the Peace Corps.
Reduce housing/rent expenses for a few years
For most young people, rent is one of the biggest monthly expenses. Numbeo found that the average renting price for a one-bedroom apartment in a city center in the U.S. is $1,213.77. Consider moving somewhere cheaper to reduce your financial demand, making it easier for you to make large student loan repayments.
Moving in with your parents will save you a lot of money, but this option isn’t for everyone. You could also consider moving to an apartment that is out of the city center, or in a cheaper state. Living in a bigger house that you share with friends is also normally cheaper than living alone!
Reduce other expenses
One of the best parts of being a young adult is finally having your own money; if you want a big-screen TV, you can buy one! However, this can make it really difficult to pay off debt quickly. Expensive items like cars and new phones are fun, but they shouldn’t be taking up more than a quarter of your budget. If they are, consider cutting back for now; you can spend the extra money on debt repayments, and once you’re out of debt you can treat yourself to a luxury item.
Refinance your loans
If you’ve been working for a few months and you have a good credit score, you may be able to refinance your loans. There are lots of competitive options for refinancing both private and federal student loans—some of them have interest rates that are as low as 2%!
Lower interest rates may reduce the minimum monthly payment, but you should keep paying the higher rate that you are used to. This way, you’ll clear your debt quickly without high interest rates.
Disclaimer: Hey! Welcome to our disclaimer. Here’s what you need to know to safely consume this blog post: Any outbound links in this post will take you away from Simple.com, to external sites in the wilds of the internet; neither Simple nor our partner banks, The Bancorp Bank and BBVA Compass, endorse any linked-to websites; and we didn’t pay/barter with/bribe anyone to appear in this post. And as much as we wish we could control the cost of things, any prices in this article are just estimates. Actual prices are up to retailers, manufacturers, and other people who’ve been granted magical powers over digits and dollar signs.