Student loan debt is impacting millions of borrowers across the world. Borrowers throughout the United States currently owe $1.7 Trillion dollars in outstanding debt. Federally backed loans will become due again in 2021, regardless of the promises made by politicians about eliminating $50,000 of debt from each borrower. I know many people that owe much more than $50,000 in student loan debt. I myself have borrowed and repaid over $200,000 of student loans throughout my academic career and will owe close to $20,000 in 2021. Below are a few thoughts I have on repaying student loan debt quick.
My Thoughts on Destroying Student Loan Debt:
- Do not ignore the debt. Anyone who has borrowed money for student loans should have a general understanding of how much is owed and to which lending houses. Review all loans and prioritize the loans with the highest levels of interest.
- Be prepared to make sacrifices. Yes, that means not buying $6.00 cups of coffee every morning, going out to eat 4-days per week, taking unnecessary luxury vacations and leasing brand new vehicles. Sacrifice now for freedom later in life. Debt freedom is something that profoundly changes your life.
- Start payments immediately. We all have six months to start making payments on student loans after completion of the program. However, if you receive money for graduation or have money in savings, I highly encourage you to make payments regardless of the amount or how often. I never wait the six months to start making payments. It will keep interest accrual at zero, which is the goal for any debt repayment.
- Make more than the minimum payment. Following the advice above, making more than the minimum payment will help knock down the interest accrual, to ensure we are attacking the principal amount of the loan. Even if the overpayment is $10 or $20 its better than the minimum payment.
- Pay more than once per month. This follows the advice in #3 and #4. Make additional payments throughout the month if you can. Continue knocking down the interest and principal. This is called the snowflake method of repayment. I keep the interest on my loans a $0, to ensure my payments knock down the principal. This requires you to review your accounts often as well, which will make the debt a priority.
- Reward yourself for successes. If you are successful at eliminating debt, take time to reward yourself with a nice meal, a short vacation, etc. I am not encouraging a luxury cruise or vacation to Europe. Think need vs. want. Do you really need it, or do you want it?
These are just a few thoughts on destroying student loan debt. My upcoming book “Slay the Student Loan Dragon Tips and Tricks on How to Conquer the Student Loan Game” will have many more suggestions and tips on knocking out any level of debt. The release date is scheduled for January 19, 2021. At the end of the day, it is a simple, we can sit around and complain about the rules and how unfair it is to have student loan debt, or you can beat the game. Student loan debt is not easy to discharge in bankruptcy courts and the government will garnish everything, including social security. The financial sacrifices today will set you up for long term financial successes throughout your entire life.