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Student loan debt is a problem for millions of Americans — 43.5 million, to be more precise. All told, U.S. borrowers owe an astounding $1.78 trillion in student loans.
On an individual basis, the average student loan balance is $37,338 for those who took out federal loans. That’s a daunting sum.
If you have a massive amount of student debt hanging over your head, you may be eager to shed it as quickly as possible. Doing so could not only save you money on interest, but also eliminate a large amount of financial stress.
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How to accelerate your student loan payments
The average monthly student loan payment is $337 a month. But if you want to shed your debt sooner, you’ll need to allocate a larger sum of money each month to your student loans.
To that end, the first thing to do is set up a budget that maps out your total monthly expenses. Add those up and see how much more money you can reasonably apply to your loans. You may have to cut back on other expenses to make higher payments, but doing so temporarily could result in a world of savings on interest.
If you’re a fairly recent graduate, consider moving back home for a period of time, if that option exists. If your parents allow you to live rent-free for a while, you might free up a lot of cash you can put into your loans.
That being said, one thing you don’t want to do is cut back on contributions to other important accounts, like your savings or retirement plans, to boost your student loan payments. If you neglect your IRA or 401(k) plan for the next four or five years to accelerate your student loan payoff, you might lose out on critical time to build retirement wealth. As such, you’ll need to strike a balance.
One thing you may want to do if you owe a large sum of money in student loans is to pick up a side hustle. The booming gig economy means there are lots of opportunities to give your income a boost. That might make it possible to not only get ahead of your student loans, but also stay on track for other key goals.
One step at a time
If you owe somewhere in the vicinity of $37,338 on your student loans, don’t expect to unload that debt overnight or even within a year or two. That may not be feasible unless you’re earning a very high salary or living at home with virtually no expenses.
But also don’t assume that you’ll be stuck paying off student loans for the next 10 years or longer. If you budget carefully and carve out extra money for your student loans, you might be able to get rid of that debt sooner than expected. This especially holds true if you’re willing to hustle by taking on a second job to give your income a lift.
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