If you were anything like me in college, you thought student loans were these magical allowances that gave you money for tuition, room and board, books and other things you needed to buy. Once you graduated, your bubble was burst and you not only realized you had to pay back every single penny you borrowed, but with INTEREST and from salaries that left you choosing food or shelter every month. With students graduating now with an average debt of $57,000 and tuition prices steadily increasing, college debt will seemingly only get higher and higher.
In an effort to help fellow sufferers like myself, here are a few tips I personally use that may help you as well.
1. Change Your Terms
Refinancing and consolidating your loans can not only help you now by lowering your payments, but can be beneficial in the long run by making sure you don’t go delinquent due to not being able to afford your loans AND helping you pay less in the long run. Private loans are the WORST as they have average interest rates of 8%, wayyyyy higher than interest for a house or even a car. You end up paying so much extra in just interest as your monthly payments usually barely even touch the principal (original amount you borrowed) of your loan. Refinancing with a different company can help you get a lower interest rate and can also help you secure lower monthly payments.
A great example of a company doing just that is SoFi (Social Finance). Well off individuals pool their money together to pay off your loan. You then pay them back on a monthly basis (one payment to SoFi, which distributes the cash accordingly) at a much lower interest rate of around 3-4%. This allows you to have to only remember one monthly bill, as opposed to paying 4 lenders or more per month and provides you with more income to use.
2. Give A Little, Get A Lot
There are many programs available that allow individuals to work off some of their debt. Teach for America pays off a portion of their teachers’ college debts in exchange for their service of working with underprivileged youth at inner city schools. Americorps, the Army, Navy and Marines all have programs providing student debt reimbursement in exchange for your service. Government jobs (USPS, IRS, SSI, etc.) also provide debt relief programs.
These are all great viable options. There are also volunteer programs that repay participants with some loan help. You can give back to your community while helping yourself out the red.
3. Increase Your Income
If all else fails, putting more money than the minimum on your monthly payments can shorten your repayment period and help you become debt free faster. Websites like Care.com provide you with local nanny, handyman and tutoring gigs, while Taskrabbit.com allows you to run errands for others and make some cash on the side. Great with words? You can do freelance work for websites and get paid per article. Strong organization skills? Websites like Freelancer.com or Guru.com have tons of openings, including virtual assistants where you can help others get organized. A few extra dollars here and there can really help you tackle those bills.
These tips are just a few of the ways you can cut down on loans. Stay tuned for more tips on how to be debt free.