How to Dig Your Way Out of Student Loan Debt

The cost of higher education continues to climb each year and few students can afford to attend college without some type of financial aid. As a result, two-thirds of undergraduate students who graduate with a bachelor's degree have an average student loan debt of just over $23,000.

If you're one of those graduates with a mountain of student loan debt, it's natural to want to pay off those loans as soon as possible. Student loans have repayment schedules that span several years, but you can take steps now to dig yourself out of student loan debt ahead of schedule.

Instructions

1

Locate all of your student loans. You cannot start paying off your student loans until you know how much you owe. This isn't completely up to you, your lenders will start sending you repayment information as soon as you graduate or drop below half-time student status. However, if you don't receive statements or repayment information, visit your school's financial aid office. Advisors will be able to look in your records and determine your student loan lenders.

2

Consolidate student loans. Consolidating your federal student loans into one loan allows you to lock in a fixed interest rate that will save you hundreds of dollars in interest over the life of your loan. If you have private student loans, you must consolidate those separately from your federal student loans. Private student loans are credit=based and typically have higher interest rates than federal loans. However, even if the interest rate is higher, you'll save money by consolidating your private student loans together because you'll make one payment instead of several separate payments.

3

Make the maximum payment you can afford. Student loans are different from other loans because lenders offer several repayment options based on your income. However, you must make larger payments in order to make a dent in your student loan balances. By paying the maximum amount you can afford, you cut down on the principal of your student loans, decreasing the balance and the amount of interest that can be charged.

4

Put extra money toward your student loans. If you really want to decrease your student loan balance quickly, be sure to pay as much as you can each month in addition to your regular payment. Consider taking on an extra part-time job and putting all of your income toward your student loans, or sell some of your unused belongings and put the proceeds toward your loans. You might be inconvenienced in the short-term, but you'll pay off your student loans faster and have the peace of mind that comes from being debt free.