There’s no doubt a college education is pricey. Currently, the average cost for a private school is $34,740 per year (including room and board). Over the four years it takes to earn a degree, that adds up to $138,960 – nearly 3 times the average college graduate’s annual salary of $50,390!
So, you have to wonder, how is it mathematically possible for anyone to pay off such hefty loans on an entry-level salary?
Student loan repayment isn’t easy, but it’s definitely possible. With a little strategic planning and a lot of self-discipline, you can slowly but surely tackle your loans. Here are six tips to get you on the right track when it comes to dealing with student debt (and any debt).
1. Do the math. Sit down with a pen and paper, or an app, and add your loans up. Come up with a final number of what you owe right now, and given your interest, what you’ll owe five years from now.
2. Run the numbers. Use our FREE Financial Planner to figure out exactly how much of your salary is left after you’ve paid rent, groceries, travel and any other necessities. Then calculate the bare minimum of what you need to pay off each month (hint: the magic number that will bring your debt down rather than letting it build up).
3. Make a plan. Determine how much you can expect to pay off each year and plan your personal budget accordingly. That way, you’ll know exactly what percentage of each paycheck you’ll need to dedicate to shrinking your debt.
4. Give yourself a reasonable deadline (and keep your budget in mind!). It could be 5, 10 or 15 years down the road, but it’s helpful to commit to an end date. So even if you’re a little strapped for cash one month, you’ll keep your deadline in mind and make it up when you’ve got more money on hand.
5. Prioritize your spending. It’s always important to know what’s truly necessary, but never more so than when you’re living on a budget. Don’t indulge yourself too often, and make wise choices in your spending.
6. Save some money for later. While you’re likely very anxious to be debt free, it’s important not to put all your savings toward the past but to also prepare for the future. Sure, it can be hard to multi-task by simultaneously working toward student loan repayment and building savings, but a bulky savings account is just what you’ll need to avoid taking out loans in an emergency situation.
Since most college graduates have a multitude of loans, all from different lenders, it’s tricky keeping track of the different terms and interest rates. iHELP Student loan consolidation combines them into one tidy package, with a competitive rate and flexible repayment options.
While paying off debt is never easy, it’s certainly doable. With a little planning, patience and persistence, you’ll find yourself debt-free in a few short years.