Student loads and college debt continue to be an increasing burden – the average student now graduates with over $37,000 in debt. That’s a lot of money to someone with little-to-no credit history, a fresh-from-school starting salary, and likely no large savings to buffer difficult times.
If you are a college graduate or about to graduate and facing a large debt load, here are some things we want you to know.
1. Your student loan debt isn’t going away – even in bankruptcy.
Think that if things get bad, you’ll just file bankruptcy and those student loans will go away? Nope. A lot of students think that burying your head in the sand will absolve you of the pain of a student loan debt, but in fact that approach will only make things worse. Acknowledge the debt and remind yourself of all the knowledge and experiences you gained in exchange! If you find that being in debt is creating mental or emotional instability, talk to a counselor and get help so you can get your focus.
2. Begin a debt reduction plan immediately, no matter how small the payments.
If you have a grace period of no interest or payments on your loan, take advantage of it and make payments! There are many ways to reduce your debt, but even if you’re making $10 more than the minimum payments, you’ll be reaping a lot of savings in the long term. When it comes to debt of this size, the best plan is to have a set payment each month that you stick to faithfully, then look for every opportunity for adding extra payments. Also look at making payments twice a month, to help leverage and reduce interest costs.
3. Consider your negotiation skills – with your employer, not the bank.
Talking with student loan companies or debt consolidation strategies can help reduce your interest rates by a slim margin, but usually the fees associated with making changes erode any cost savings. Instead of negotiating with the bank, consider negotiating with your employers! It might be time to ask for a raise, or if you’re interviewing, make sure that you have a good understanding of the salary range and get the best offer you can – those extra pennies used to pay off debt will add up quickly.
4. Being in debt is better together!
Politicians are using “together” a lot right now, but I’m serious about this one – find yourself an accountability partner who can help cheer you on and perhaps provide some competitive motivation for getting your debt down fast. It’s often cited in the financial blogger space as one of the keys to their success. Even if you just ask your BFF to check-in with you regular and give you some personal motivation, that may be the ticket to paying off that debt with ease and reaching financial freedom.