Many college graduates finish with student loan debt in the five to six figure range. With no job lined up in a weak economy, it may seem impossible to pay off a large student loan debt. I supported myself all throughout college, and paid off my student loan debt without financial assistance from anyone else. This is how I paid off a large student loan in less than two years.
I was once a new college graduate with a five-figure student loan debt. I graduated from college with two student loan debts hanging over my head: a $15,000 loan and a smaller $2,500 loan. If I hadn't worked part-time jobs throughout college, my student loan debt would have easily been double that.
I believe life is all about balancing priorities within your life and budget. For most of my college years, I had no car. I paid $60/quarter for an unlimited bus pass that would take me anywhere I needed to go. I learned how to use the bus system and saved myself hundreds of dollars on parking, gas, maintenance, and car insurance. I used the school gym, which was already included in the price of tuition, saving me a few hundred dollars a year. In addition to saving money in different areas of my life, I also took opportunities to make money whenever they came up. As a college student, I was a prime subject for research studies that generally paid $20-$30 for half an hour of my time. I signed up for non-invasive studies, and learned a few things along the way. I also did some tutoring on the side and held a part-time job during my last year of college. By doing all of this, I was able to save up over $2,000 by the time I graduated college, after buying and paying off a car loan during my senior year. This money would end up going toward the student loan debt I had amassed while in college.
Both of the student loans that I took out were federal loans and wouldn't start accruing interest until a few months after I graduated. I took advantage of this and didn't start repaying my loans until I had to. Why pay off a loan sooner than you have to, if you're not being penalized for not paying? You can put your savings in a money market account and earn a little (and I do mean little) interest off it in the meantime. There are also some other low-risk options you can look into, such as CDs and bonds, that may pay a little more. I wouldn't recommend investing the savings in a higher-risk or long-term option if your goal is to pay off your student loan quickly. This brings me to the first step of paying back a large student loan:
1. Pay off High Interest and Variable Student Loans First.
If you have multiple student loans, pay off your loans with the highest interest rates first, followed by those with a variable rate. Interest adds up to hundreds and thousands of dollars over time, so you want to make sure to eliminate the loans that are costing you the most money and have the highest risk first. Variable rate loans are always risky since the interest rate can change at any time, but it shouldn't be a high concern in this economy. It is unlikely that loan rates will be increasing significantly anytime soon. It was a different story a few years ago when I was repaying my loan, since interest rates were constantly changing.
Note - this strategy does NOT mean that you should neglect the monthly or quarterly payments required by your other student loan(s)! It simply means that you should be putting any extra money that you are earning toward the high interest and variable interest loans, instead of spreading it evenly across all your loans.
In my case, the $2,500 student loan had a variable interest rate that was, at the time, half a percent higher than my $15,000 loan and predicted to increase another one or two percent in the near future. My $15,000 loan was a fixed interest rate that wouldn't change for the life of the loan. I would make payments for both student loans, and put extra toward the $2,500 loan when I had the money. This brings me to step number two:
2. Make All Your Loan Payments on Time, and in Full.
Be sure to pay all your student loan bills on time. The fees and penalties for missing payments add up quickly! I worked at a bank during my senior year of college, and I met so many people that kept falling deeper and deeper into debt because they couldn't keep up with all the fees and compounding interest that they were being charged for making late payments. Remember, most loans work on compound interest, so you're racking up interest for each day the loan is outstanding. If you look on a quarterly student loan bill and notice that you've accrued $200 of interest charges in that quarter, that means that you were adding around $2 a day to your loan. It pays (literally!) to make your payment on time, or even early. This goes for almost all loans, not just student loans.
3. Remember to Claim Tax Deductions and Credits.
While you're repaying student loans, remember to take the tax deductions and credits that you are entitled to. You're allowed to take a tax deduction for any student loan interest you've paid that year if you meet certain qualifications. I don't claim to be any type of tax advisor, so I'm going to refer you to a tax consultant or to TurboTax 's Tips if you want more information on this topic. The IRS also has a free hotline that you can call to get any tax-related questions answered, which I highly recommend. It's been extremely helpful for me in the past, and you're getting answers straight from the source!
4. Prioritize.
Whenever you're trying to pay off a big debt or save a large amount of money, you need to prioritize where you're spending the money you are making. I can go into a whole separate article on this topic, but I will keep it brief. Have you compared car insurance quotes to see who is most affordable? Have you called your TV and Internet provider to negotiate rates? Are there any luxuries you can cut out or cut back on? Can you buy in bulk to save money? If you're renting, is finding a roommate an option? Do you really need that many minutes on your cell phone plan?
For purchases that are absolutely necessary, make sure you are spending smart by comparing prices and using coupons. Put any money you save toward paying off your student loan.
How I Paid Off a Five-Figure Student Loan Debt:
I followed the four basic steps listed above to pay off my nearly $20,000 student loan in a year and a half. For the first four months after graduation, I only held a part-time bank job that paid me $10.50 an hour. At the time, that was only $1 above minimum wage in Washington State. My monthly gross income averaged $1000. I set up direct deposit and put $200 into my checking account every month for spending money; the remainder went into a separate savings account that was much more difficult to access. This made it easier to resist spending my savings since it went into an account that I could only access online through a multi-step process. I forced myself to stick to a budget. Every month, I was able to add around $500 to my savings. I should add, I swallowed my pride and was living at home with my parents again at this point.
Four months out of school, I accepted my first full-time job with a starting salary of $40,000 a year. I continued the same strategy of only giving myself a few hundred dollars to spend every month and funneled the rest into my savings account (and my 401K). Between my college jobs and my part-time bank job, I already had $4,000 saved up by the time I landed this job.
At this point, I had enough money to pay back one of my student loans in full, but waited to do it since the loan didn't start accruing interest until 9 months out of school. My money market was paying a healthy 5% interest rate at the time, so I wasn't in any hurry to give away my money. I stashed my money away in my money market account until the time came to pay off the student loan.
Nine months out of college, I decided it was time to move out of my parents' house again. I found two roommates and we all shared a small three-bedroom apartment for $400/person per month. This allowed me the freedom and independence I needed, while continuing to put over half of my take-home pay into my savings account (around $1,000 a month). I was able to quickly pay off my $2,500 loan, since interest had just started accruing around this time, and the rest started going into my larger $15,000 student loan. With $1,000 going into my remaining student loan every month, I was able to pay off the second loan in fourteen months. In a year and a half of diligent saving, I was able to save up over $18,000 to pay off all my student interest loans in full, including accrued interest.
Perseverance, diligence, and determination is key to paying off a large student loan (as well as a little luck in the job market). Just take it one step at a time, and remember the four key points I outlined above.
Read :-
1.Considerations for student loan consolidation
2.Binary Signals aka Option trading
3.Earn $1000 to $1500 a Month - Easy and working method
I was once a new college graduate with a five-figure student loan debt. I graduated from college with two student loan debts hanging over my head: a $15,000 loan and a smaller $2,500 loan. If I hadn't worked part-time jobs throughout college, my student loan debt would have easily been double that.
I believe life is all about balancing priorities within your life and budget. For most of my college years, I had no car. I paid $60/quarter for an unlimited bus pass that would take me anywhere I needed to go. I learned how to use the bus system and saved myself hundreds of dollars on parking, gas, maintenance, and car insurance. I used the school gym, which was already included in the price of tuition, saving me a few hundred dollars a year. In addition to saving money in different areas of my life, I also took opportunities to make money whenever they came up. As a college student, I was a prime subject for research studies that generally paid $20-$30 for half an hour of my time. I signed up for non-invasive studies, and learned a few things along the way. I also did some tutoring on the side and held a part-time job during my last year of college. By doing all of this, I was able to save up over $2,000 by the time I graduated college, after buying and paying off a car loan during my senior year. This money would end up going toward the student loan debt I had amassed while in college.
Both of the student loans that I took out were federal loans and wouldn't start accruing interest until a few months after I graduated. I took advantage of this and didn't start repaying my loans until I had to. Why pay off a loan sooner than you have to, if you're not being penalized for not paying? You can put your savings in a money market account and earn a little (and I do mean little) interest off it in the meantime. There are also some other low-risk options you can look into, such as CDs and bonds, that may pay a little more. I wouldn't recommend investing the savings in a higher-risk or long-term option if your goal is to pay off your student loan quickly. This brings me to the first step of paying back a large student loan:
1. Pay off High Interest and Variable Student Loans First.
If you have multiple student loans, pay off your loans with the highest interest rates first, followed by those with a variable rate. Interest adds up to hundreds and thousands of dollars over time, so you want to make sure to eliminate the loans that are costing you the most money and have the highest risk first. Variable rate loans are always risky since the interest rate can change at any time, but it shouldn't be a high concern in this economy. It is unlikely that loan rates will be increasing significantly anytime soon. It was a different story a few years ago when I was repaying my loan, since interest rates were constantly changing.
Note - this strategy does NOT mean that you should neglect the monthly or quarterly payments required by your other student loan(s)! It simply means that you should be putting any extra money that you are earning toward the high interest and variable interest loans, instead of spreading it evenly across all your loans.
In my case, the $2,500 student loan had a variable interest rate that was, at the time, half a percent higher than my $15,000 loan and predicted to increase another one or two percent in the near future. My $15,000 loan was a fixed interest rate that wouldn't change for the life of the loan. I would make payments for both student loans, and put extra toward the $2,500 loan when I had the money. This brings me to step number two:
2. Make All Your Loan Payments on Time, and in Full.
Be sure to pay all your student loan bills on time. The fees and penalties for missing payments add up quickly! I worked at a bank during my senior year of college, and I met so many people that kept falling deeper and deeper into debt because they couldn't keep up with all the fees and compounding interest that they were being charged for making late payments. Remember, most loans work on compound interest, so you're racking up interest for each day the loan is outstanding. If you look on a quarterly student loan bill and notice that you've accrued $200 of interest charges in that quarter, that means that you were adding around $2 a day to your loan. It pays (literally!) to make your payment on time, or even early. This goes for almost all loans, not just student loans.
3. Remember to Claim Tax Deductions and Credits.
While you're repaying student loans, remember to take the tax deductions and credits that you are entitled to. You're allowed to take a tax deduction for any student loan interest you've paid that year if you meet certain qualifications. I don't claim to be any type of tax advisor, so I'm going to refer you to a tax consultant or to TurboTax 's Tips if you want more information on this topic. The IRS also has a free hotline that you can call to get any tax-related questions answered, which I highly recommend. It's been extremely helpful for me in the past, and you're getting answers straight from the source!
4. Prioritize.
Whenever you're trying to pay off a big debt or save a large amount of money, you need to prioritize where you're spending the money you are making. I can go into a whole separate article on this topic, but I will keep it brief. Have you compared car insurance quotes to see who is most affordable? Have you called your TV and Internet provider to negotiate rates? Are there any luxuries you can cut out or cut back on? Can you buy in bulk to save money? If you're renting, is finding a roommate an option? Do you really need that many minutes on your cell phone plan?
For purchases that are absolutely necessary, make sure you are spending smart by comparing prices and using coupons. Put any money you save toward paying off your student loan.
How I Paid Off a Five-Figure Student Loan Debt:
I followed the four basic steps listed above to pay off my nearly $20,000 student loan in a year and a half. For the first four months after graduation, I only held a part-time bank job that paid me $10.50 an hour. At the time, that was only $1 above minimum wage in Washington State. My monthly gross income averaged $1000. I set up direct deposit and put $200 into my checking account every month for spending money; the remainder went into a separate savings account that was much more difficult to access. This made it easier to resist spending my savings since it went into an account that I could only access online through a multi-step process. I forced myself to stick to a budget. Every month, I was able to add around $500 to my savings. I should add, I swallowed my pride and was living at home with my parents again at this point.
Four months out of school, I accepted my first full-time job with a starting salary of $40,000 a year. I continued the same strategy of only giving myself a few hundred dollars to spend every month and funneled the rest into my savings account (and my 401K). Between my college jobs and my part-time bank job, I already had $4,000 saved up by the time I landed this job.
At this point, I had enough money to pay back one of my student loans in full, but waited to do it since the loan didn't start accruing interest until 9 months out of school. My money market was paying a healthy 5% interest rate at the time, so I wasn't in any hurry to give away my money. I stashed my money away in my money market account until the time came to pay off the student loan.
Nine months out of college, I decided it was time to move out of my parents' house again. I found two roommates and we all shared a small three-bedroom apartment for $400/person per month. This allowed me the freedom and independence I needed, while continuing to put over half of my take-home pay into my savings account (around $1,000 a month). I was able to quickly pay off my $2,500 loan, since interest had just started accruing around this time, and the rest started going into my larger $15,000 student loan. With $1,000 going into my remaining student loan every month, I was able to pay off the second loan in fourteen months. In a year and a half of diligent saving, I was able to save up over $18,000 to pay off all my student interest loans in full, including accrued interest.
Perseverance, diligence, and determination is key to paying off a large student loan (as well as a little luck in the job market). Just take it one step at a time, and remember the four key points I outlined above.
Read :-
1.Considerations for student loan consolidation
2.Binary Signals aka Option trading
3.Earn $1000 to $1500 a Month - Easy and working method
Read :-
1.Considerations for student loan consolidation
2.Binary Signals aka Option trading
3.Earn $1000 to $1500 a Month - Easy and working method - See more at: http://www.bizocean.org/#sthash.hFIw1xMp.dpuf
1.Considerations for student loan consolidation
2.Binary Signals aka Option trading
3.Earn $1000 to $1500 a Month - Easy and working method - See more at: http://www.bizocean.org/#sthash.hFIw1xMp.dpuf
Read :-
1.Considerations for student loan consolidation
2.Binary Signals aka Option trading
3.Earn $1000 to $1500 a Month - Easy and working method - See more at: http://www.bizocean.org/#sthash.hFIw1xMp.dpuf
1.Considerations for student loan consolidation
2.Binary Signals aka Option trading
3.Earn $1000 to $1500 a Month - Easy and working method - See more at: http://www.bizocean.org/#sthash.hFIw1xMp.dpuf
