Going to college is a privilege, but it’s a privilege that often comes at a steep price. Among college graduates, 69% of students graduate with an average debt of $29,800. Secondary education is considered necessary for entry into a profitable field, which makes the rising cost of tuition a questionable practice at best. But we won’t let you flounder! There is hope for paying off your loans—here are just a few tips to repay your loans that can get you debt-free, fast.
Organize Your Loans
Many students take out multiple loans, so you should be aware of exactly how many you’ve taken out. Consult the National Student Loan Data System to access a list of all your federal loans as well as your credit score report. Having all of your loans laid out will help you set a schedule for monthly payments and organize them by the balances and interest rates.
Consider Refinancing and Consolidation
Refinancing can be a lifesaver for struggling graduates. It’s a way to replace your old loan with a new loan at a different, ideally reduced, interest rate. The upside of refinancing is that it can make loan repayment more manageable and save you money on interest costs. However, refinancing does come with a few downsides. It can be expensive, with closing costs and processing fees reaching into the thousands of dollars. Any benefits you obtained from your original loans will not carry over during the refinancing process, so you stand to lose quite a few helpful features.
Consolidation refers to the process of combining all your loans into one loan with one consistent interest rate and one single monthly payment. Only choose consolidation if the final consolidated debt offers lower monthly payments or a far reduced interest rate. Since consolidation often involves extending the period of repayment, you run the risk of paying more interest on your debt long-term.
Do More Than The Minimum Payment
This is true for all payment processes, from student loans to car loans to credit card debt. The more you pay each month, the lower your interest will be over the course of the repayment period. Ultimately, interest will still be applied to the remaining unpaid balance, and over the course of a few months, compounding interest can really rack up your debt.
Live Below Your Means
With great freedom comes insane credit card debt—which means, yes, you have to live responsibly. You may have to postpone trips and delay extravagant nights out. However, your quality of life will improve once you get yourself out of debt. Focus on the long-term goal, and don’t succumb to short-term pleasures.