HOW TO REDUCE STUDENT LOAN DEBT
Student loan debt can disrupt your life, physically, mentally and financially even years after graduation. Facing mounting student loan debt can make it more difficult to pay your other bills on time. You find yourself paying through the nose every month and wishing there are was some way you could reduce that student loan debt.
There are ways to reduce your student loan debt before and after graduation, like loan deferment or forbearance, but we have listed tips below which may also be helpful.
Here are some legitimate ways to reduce your student loan debt
- Look into every avenue for free money including scholarships and grants while in school. That way, you will have less to spend on as a student. Only when all the avenues have been exhausted should you seek a student loan.
- Get economical with your spending and income. You can do part time jobs to enhance your income and help you reduce loan debt. Spending wisely only on the basic necessities will also help you, especially when you improve on your saving habit.
- Use an income-driven repayment (IDR) plan. With this plan, the loan servicer stretches the repayment period over 20-25 years based on your monthly discretionary income. In addition, family size and loan balance also affects the payment. The IDR plan allows for smaller payment with higher interests though, lessening your burden.
- Go for student loan consolidation when you have multiple federal student loans with multiple payments, interests and repayment terms. Loan consolidation will lump the numerous loans into one, creating a single federal loan with singular monthly payment and interest. For private loans, you can try out loan refinancing too.
- Opt for auto-debit such that your monthly payment is automatically deducted from your account to that of the lender. That way, you gain from the minor reduction in interest rate which most lenders offer when you sign up for auto-debit. The reduction can be as little as 0.25% or as much as 0.50%.
- Use the graduated repayment plans which allows you to commence repayment from a lower amount, and then increase over time. This plan is built on the belief that your income will increase as time goes on.
- Look for loan forgiveness programs. There are certain Federal loan plans that forgive your debt after a certain period based on some requirements. To be eligible, you must work in certain disciplines like nursing, teaching, law, military, and public service for a period of time. However, some loans are not eligible for this forgiveness program.
- Have a side hustle that will increase your income, especially when your basic job is paying very little. Your hobby or passion can be turned into a source of income. There are many side gigs you can conduct from your home like writing, crafts, e-commerce and so on.
The cost of acquiring education is sky-rocketing even though education is a necessity for both the rich and the poor. But with advance planning and spending, you can become debt free in little time.