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An estimated 43.5 million Americans owe money in the form of student loans. By comparison, total U.S. credit card debt is estimated to be $917 billion, according to TransUnion.
The average federal student loan borrower owes $37,338 in educational debt, which is not a small sum of money. And if that’s the total you’re liable for, you may be eager to shed that debt as quickly as possible.
Image source: Getty Images.
The standard repayment period for federal student loans is 10 years. But you may want to get rid of your student debt in half that time. If so, here’s what you need to do.
1. Boost your monthly payments consistently
The average monthly student loan payment is $337. That may be comparable to the monthly total you’re on the hook for.
But no matter what your monthly student loan payment looks like, if you want to pay off your debt ahead of schedule, plan to pump extra money into your loan every month. Doing so could help you shed your debt much sooner.
Take a look at your budget and figure out how much extra money you can afford to put into your loans. And then, set up automatic payments that have you paying more off the bat. That way, you’ll be able to resist the urge to spend your extra money.
2. Use your raises to pay down your debt
Ideally, your income will increase year after year — either because your employer rewards you for a job well done or your company follows the practice of giving out cost-of-living raises. Since your raise represents money you aren’t used to receiving, a good bet is to allocate all of it to your student loan payments so you can eliminate that debt sooner.
Again, this is something you may want to automate once your higher paychecks start coming in. Figure out what you can afford to pay and put the process on autopilot.
3. Apply windfalls to your student debt
You may come into extra money here and there, whether it’s a tax refund, a bonus from your employer, or even some dividend income from a stock you hold. Putting that additional cash into your student loans could make them disappear sooner.
You may even want to request cash gifts for occasions such as birthdays and holidays and use the money to make extra loan payments. That may not be as fun as getting new clothes or electronics, but it could help you meet your goal.
Paying off a loan balance in the ballpark of $37,338 can be a challenging thing to do in 10 years, let alone five. But if you’re eager to pay off your debt in half the time it commonly takes federal student loan borrowers, then prioritizing it is key.
If you make the above moves, you may find that you’re debt-free much sooner than your peers. And you’ll be able to shed the mental burden that comes with carrying student debt at a much earlier age.
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