Many Americans think of college as a gateway that will open up new career opportunities for them. And according to the Bureau of Labor Statistics, this is true. In fact, college graduates earn as much as $461 more each week than those who never went to college.
But if you ask an average American who went to college if the cost of their education was worth it, you may be surprised to hear a resounding “No.” In a recent survey published by Freedom Debt Relief, 39% of people said that their college education wasn’t worth the cost.
Perhaps one of the reasons why so many Americans seem to be dissatisfied with their college education is the debt they incurred as a result. Of those surveyed, 21% stated that they continue to carry student loan debt, and 19% of those surveyed stated that debt—including student loan debt—was a barrier to buying a home.
It’s a fact that a college education gives you better career opportunities and earning potential. But given that the cost of a college education has more than doubled between 1986-2016, it’s understandable why many Americans are unhappy with the cost of their education.
Student loan debt can eat away at your income and put your financial goals of buying a home or saving for retirement out of reach. But there are ways to get out of student loan debt faster so that you can start focusing on more important long-term goals. Here are some tips that could help.
1. Make More Than the Minimum Payment
Perhaps the easiest way to get out of student loan debt faster is by paying more than the minimum on your debt each month. Depending on how much extra you can put towards your student loan monthly payments, you could shave years off your loan and save you a ton on interest. Of course, this method requires you to have extra cash to put toward your debt each month. If you’re looking for ways to free up extra cash so you can pay off your student loans faster, check out our money-saving tips.
2. Use All Your Cash Windfalls to Pay Off Your Student Loans
Every time you receive extra money, put it towards your student loan debt. No matter how much it is, every bit could help. Windfalls like tax returns, bonuses from work, an inheritance, or stock yields could all be put toward your student loans to help speed up the loan repayment process.
3. Download Student Loan Debt Payoff Apps
If your student loan provider offers an app, download it and use it. While you’re at it, download some of the many apps that let you round up your purchases and apply that cash towards your student loan debt. Technology can make it easier for you to track your student loan debt and pay it off faster, so make the most of it. You can learn more about apps that help you pay off student loan debt here.
4. Consolidate or Refinance Your Student Loan Debt
If you have multiple student loans, consolidating or refinancing these loans could help you pay them off faster. Depending on whether you have federal student loans, private student loans, or a mixture of both, you have different options available to you:
Federal Student Loan Consolidation
If you have multiple federal student loans, you could consolidate those loans into one new federal student loan. The interest rate on this new loan is a weighted average of all of your loans rounded up to the nearest one-eighth of a percent.
While federal loan consolidation could simplify your monthly payment, you’ll still pay the same amount in interest as you would if you didn’t consolidate.
Student Loan Refinancing
Whether you’re dealing with private or federal student loan debt or a mixture of both, student loan refinancing could be right for you. Student loan refinancing allows you to roll multiple debts into a loan with new rates and terms. If you have good credit, you could even score a lower interest rate than you’re paying right now.
Student loan refinancing could save you money, but if you choose to refinance a federal student loan, you will no longer qualify for certain benefits—like deferment, income-based repayment plans, or forbearance.
Consolidating our refinancing your student loans is a big decision, so do your research and make sure you read the fine print before committing to either of these options.
5. Apply for Student Loan Forgiveness
Public Service Loan Forgiveness (PSLF) is a federal student loan program that eliminates your debt balance after you’ve made 120 qualifying payments to your student loan debt. However, in order to qualify for this program, you need to work for an eligible organization, including:
- A 50(c)3 nonprofit organization
- A not-for-profit that meets public service-related requirements
- AmeriCorps or the Peace Corps
- Federal, state, local, or tribal government organizations
Public Service Loan Forgiveness could save a lot of money, but not everyone is eligible. You can learn more and see if you qualify for PSLF. You could also qualify for federal student loan forgiveness if you are a nurse or teacher, or if you have made on-time payments for a certain amount of years. To find out if you qualify for student loan forgiveness, check out this article.
6. Use Your Home Equity
If you’re a homeowner with equity in your home, you could tap into your home’s value to pay off your student loan debt. Some ways to do this include a cash-out refinance, home equity line of credit, or home equity loan. Each of these options could help you consolidate your student loan debt at a lower interest rate. However, if you roll your student loan debt into your mortgage and can’t make your new monthly mortgage payment, you could lose your home.
There are many ways to pay off your student loan debt faster, but most of them will cost you more than you’re paying right now. In order to free up the cash you need to get out of student loan debt, you may need to deal with other kinds of debt first.
A good place to start is your credit card debt. As you may know, credit card debt is one of the most expensive kinds of debt—so paying it off should be one of your top priorities. By eliminating your credit card debt, you’ll have more cash that you can apply to your student loan debt.
Debt consolidation loans, debt settlement, and credit counseling are all options that could get you out of credit card debt quickly—but it can be hard to figure out which solution is right for you. If you need help deciding which of these options would work best for you situation, check out our article on how to get out of credit card debt now.