- Guest Contributor
- June 29, 2021
You took on student debt because you knew it would help you reach your career goals. Now that you have been out of school for a while, it would sure be nice to make that student debt disappear. The good news is that you can, eventually, reduce and then eliminate your student debt with the tips below.
Start by Organizing Your Loans
If you’re like the typical college graduate, you incurred student debt from multiple sources. That can make it challenging to keep track of payment amounts, who to send them to, and when to send them. A common mistake among people trying to pay down their student debt is to assume that some loans have combined payments when they do not. While an easy mistake to make, it can cost you late fees, increased interest rates, and problems with your credit report. Organizing your loans to avoid such errors is a much better idea.
- Create a spreadsheet with name of lender, type of student loan, loan servicer contact information, interest rate, payoff amount, monthly minimum payment, and the next due date. Don’t forget to include whether the loan is currently in forbearance, a grace period, or deferment.
- Register for the National Student Loan Data System to track all student debt online.
- Organize electronic and paper communication you receive from each lender into its own folder.
- Sign up for auto-pay if the lender offers it to make sure you don’t miss a payment. You just need to ensure you have enough money in your checking account to cover the withdrawal amounts.
- Inquire with the lender about choosing a flexible monthly payment date to give you fewer dates to remember.
Crunch the Numbers: How Much of Your Paycheck Can Go Towards the Debt?
Sure, you want to pay down your student debt as quickly as possible, but you also need money to live. Sapling, a well-known print and online publication on financial matters, recommends reserving 50 percent of your net income to pay for necessities like mortgage or rent, food, gasoline, and insurance.
The publication’s advice goes on to say that you need around 30 percent for non-necessities like entertainment. However, you can always choose to reduce that amount if you want to put more towards student debt. With the remaining 20 percent of your budget, choose whether you want to put money into savings, a retirement account, or make extra payments towards student debt.
Explore Options to Help with Student Debt
If doing so would make sense with your current financial situation, you may want to look into ways to reduce your student debt burden such as consolidating or refinancing loans. This can save you significant money on interest over the life of the loan.
While your debt might seem overwhelming right now, you’re a hard worker. You can get it paid off with your usual dedication. It should also please you to learn that the education secretary has suspended federal student loan payments and collection activity through September 30, 2021.
About the Author: Lisa Kroulik has worked as a freelance content marketing writer for 10 years. She loves the work and the lifestyle it affords. Learn more about Lisa’s work and availability through Writer Access.
