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Financial Literacy Guide: A Crash Course for Students
Paying off student loans can seem like a daunting task. The average student loan debt in America is $32,731, with an average student loan payment of $393. Nowadays, many professions require a college degree, making higher education more important than ever. But paying off your student loans doesn’t have to feel overwhelming! All you need is a plan for how to pay off your student loans.
The first thing you should do on your journey to paying back student loans is organize all of your student loan debt in one place. Determine how much loan debt you have by creating a spreadsheet with all of your loan balances, monthly payments, interest rates, and payment due dates. This will help you visualize how much you really owe and set your sights on your goal.
The next step is seeing if making all of your monthly loan payments is actually possible. To do that, you’ll need to create a budget. Establish how much money you spend each month on necessities (housing, food, transportation costs, etc.), and see how much money is left over after. Determine if there are any ways you can reduce your monthly spending, like limiting takeout to once per month instead of once per week. You can also look for side gigs that can help you bring in additional income each month.
It’s very important to start paying back your student loans right after your grace period and to make the payments on time in order to build a good credit history, so making a repayment plan early on is crucial.
The best way to pay off student loans is to make more than the minimum payment each month if you are able to. By doing so, you’ll reduce the overall number of payments you make in the long run, meaning you’ll end up paying less interest on your loans. That’s how to pay off student loans fast!
There are two main approaches to paying off your student loan debt quickly. The first is the debt avalanche method. This method is great if you want to reduce the amount of interest you pay. It involves making the minimum payment on all loans and then putting any money left over toward the loan with the highest interest rate first. Once that loan is paid off, put the amount you were paying toward the loan with the second-highest interest rate, and so on until all of your loans are paid off.
The other method is called the snowball method, which is a great method if you need motivation to keep going. This involves paying the minimum payment on all loans, then putting any extra toward paying off your smallest loans first. Once that’s gone, put that payment amount toward the next-smallest loan, and so on. Many people find it satisfying to quickly eliminate smaller loan payments so that only one remains.
Whatever strategy you choose, putting any extra money you have each month toward student loans will help you pay off student loans quickly.
It may be worth considering refinancing your student loans if it will end up saving you money. Refinancing student loan debt means consolidating all of your debts and paying only one monthly payment. In order to refinance, you first must find a lender that will give you a lower interest rate. Get quotes from different lenders to see which will give you the best deal. You will then choose your loan terms, like the length of your repayment period and whether you want a variable or fixed interest rate. Paying back student loans may be easier if you only have one monthly payment to make.
But there are some cons to refinancing student loans that all borrowers should be aware of. When you refinance, you can no longer qualify for public student loan forgiveness by working as a nurse, lawyer, or teacher. Private student loans also do not have income-based repayment plans like some government loans do. It’s best to fully consider your options before deciding to refinance your student loans.
Having the right tools at your fingertips can help make the student loan repayment process easier. From monthly payment calculators to general budgeting tools, these resources can help you get a better handle on your finances and get started on your journey toward financial independence.
If you are about to enter or are still in college, scholarships are a great way to cut down your student loan debt. Current college students should also keep revisiting scholarship opportunities, as they may become eligible for some that were not previously available to them. It’s important to note that scholarships you’ve been awarded may affect other student aid you are receiving, and all of your aid added together can’t be more than your cost of attendance at school.
A lot of scholarships are awarded based on academic or athletic success, but that isn’t the only way students can obtain scholarships. There are scholarships available for many different hobbies, interests, and skills. A great way to start looking for scholarships is to think about what you excel at or what you’re interested in and go from there. These scholarships may require you to write an essay or submit a creative project, but the effort can be well worth it.
These resources may be helpful when searching for college scholarships:
If you have any questions about scholarships and how they will impact the amount of financial aid you receive, contact your school’s financial aid office.
One great way to stay on top of student debt is to save as much money as you can while you’re in school. You may be wondering how to save money in college. Luckily, many companies offer discounts for college students that will allow you to pocket the extra savings.
Some restaurants and fast-food chains also offer discounts or special deals for students. When in doubt, just ask!
Once you graduate and find a job, you’ll be able to start paying off your student loans. It can be difficult to find entry-level positions for recent college grads, but these sites can be useful in finding the right post-college job for you.
Paying off student loans doesn't have to be an overwhelming task. With a little bit of preparation and planning, you can discover how manageable it can be. Hopefully, these resources and the information in this guide will help you on your journey to paying off your student loans and finding a rewarding job in your field!
