Financial independence and freedom
is everyone’s right but it’s not always easy to achieve. And if you’ve been saddled with crippling student loans, it’s time to shake those shackles off and be free.
In an article in Time magazine, Mark Kantrowitz
, one of the nation’s leading student financial aid experts, describes how the average student loan debt at graduation has been growing steadily over the last two decades. “In 1993-94, about half of bachelor’s degree recipients graduated with debt, averaging a little more than $10,000. This year, more than two-thirds of college graduates graduated with debt, and their average debt at graduation was about $35,000, tripling in two decades.”
About 40 million Americans have outstanding student loans and debt imprisonment is a real thing, with the US government sanctioning federal agents in combat gear
bursting into debtors' houses and arresting them.
Some illuminating statistics to grasp the extent of this problem:
- On average, students can expect to spend a national estimate of approximately $22,000 per year on an undergraduate post-secondary education.
- It takes an approximately four years to earn a degree, which will end up costing approximately around $88,000.
- If the entire amount is financed in loans at a fixed interest rate of 5.75 percent, the total cost of the loan would average out to approximately $147,000. Of course, to know exact numbers, feel free to calculate the total cost of a student loan, visit the Sallie Mae student loan calculator.
- The worst part is that the time it takes to pay back the loan can span 180 or 218 months, or 15 to just over 18 years. Some loan re-payment options can be spread to as much as 25 years!
But you needn’t worry because we’ve got your back. We’ve brought you real-life helpful advice
on how to pay off student loans faster, from people who have actually done this:
Here are some handy guidelines from Andy Josuweit
who successfully demolished his student loan debt of $107,000 and is now CEO of Student Loan Hero
, which he created in 2012 to help students organize, manage, and repay their loans with customized solutions and intelligent repayment options.
His biggest and most interesting tip based on experience: the Side Hustle. He did the following things to make money:
But here are some more tips from folks who have slain their student loan dragons:
- Sold water at a rave
- Participated in a medical study
- Worked as a coat checker for a party
- Worked as a brand ambassador (which increased my income by $5,000 per year with a few gigs per month)
- Worked as a housecleaner
- Worked as a pet sitter
- Worked as a registration assistant for a race
- Make More Than The Minimum Payment: This is one of the easiest ways to reduce your debt. Just take the payments you have and add extra money to the payment. You should already have payments set up, so anything extra goes straight toward your principal. An easy way to do this is to set up automatic payments with this extra amount added in, even if you can only afford an extra $20 a month, and then gradually work on increasing your extra payments.
- Consolidate And Refinance: Refinancing is one of the best moves out there for paying off student loans faster. The goal is to decrease interest rates, meaning more of your payments go towards paying down your student loans. When you refinance, you’ll get one consolidated loan with one monthly payment. You’ll likely just want to include loans where you can actually decrease your interest rate. For example, student loan refinancing rates below 2% are currently available. For current rates, see his post on student loan refinancing rates.
- Take A Job That Offers Forgiveness: Certain jobs, like public service work or teaching, may offer forgiveness for part or all of your student loans. All you have to do is meet the requirements to get your student loans forgiven. But you need to meet all the requirements and complete the full term of work required to take advantage of these programs. Plus they are typically used in conjunction with income-based repayments, so your payments will decrease but interest charges will accumulate. Beware of getting stuck with greater interest charges, if by some bad luck you wind up ineligible for forgiveness.
- Use What You Have:
- If you get a raise on a quarterly or half-yearly basis, use chunks of it (like 50 percent) to pay back student loans.
- Live within your means and decrease your budget either by moving to a cheaper apartment, skipping happy hours or meals out, and earning more side income. Cancel cable TV, stop guzzling overpriced lattes, use public transport or carpool or even work out at home instead of at an expensive gym. Even one thing at a time for a month is a good try and will help you achieve your goal.
- Speak to your boss about including a student loan repayment as part of your benefits package even if they don’t have an official program. Similar to signing bonuses and health benefits, student loan repayment is another way for employers to attract top talent. Pitch it to him as a guarantee that you will stay on for a certain amount of time.
- Volunteer for programs like the AmeriCorps and Peace Corps, both offer some manner of education award or partial loan cancellation in addition to paying your living expenses during your time of service.
- Rent out your apartment on AirBnB if you travel often and be a part of the sharing economy. Put aside the money you earn to pay back the loan. You can even rent out just a room and not necessarily your whole place.