Five ways to decimate your student loan debt quickly in 2021
Do you need help managing your student loan debt? Anyone who has borrowed money to fund their higher education might know that student loans can come with eye-watering interests. In the US alone, there are 45 million borrowers who collectively owe nearly US$1.6 trillion in student loan debt.
Student loan debt has led many to delay making major life milestones, from getting married to buying a house.
Despite that, becoming a graduate may be well worth the effort; on average, graduates typically earn more than non-graduates and are less likely to be unemployed. Having a postgraduate degree can also open the doors to more career options, including those with a higher income.
There are several things you can do either before or after you graduate to pay off your debt quickly and make things financially easier for yourself in the future.
Here are some steps you can take that will pay off in the long run so you’re not burdened by student loan debt longer than necessary:
Find a high-paying job
Finding a high paying job straight off the bat upon graduating may not be realistic for everyone, but students with certain qualifications can benefit from this.
According to the US Bureau of Labor Statistics, these 10 occupations have the highest median annual pay:
|OCCUPATION||2019 MEDIAN PAY|
|Psychiatrists||This wage is equal to or greater than US$208,000 per year|
|Obstetricians and gynecologists||This wage is equal to or greater than US$208,000 per year|
|Surgeons, except ophthalmologists||This wage is equal to or greater than US$208,000 per year|
|Prosthodontists||This wage is equal to or greater than US$208,000 per year|
|Oral and maxillofacial surgeons||This wage is equal to or greater than US$208,000 per year|
|Orthodontists||This wage is equal to or greater than US$208,000 per year|
|Anesthesiologists||This wage is equal to or greater than US$208,000 per year|
|Physicians, all other; and ophthalmologists, except pediatric||US$206,500 per year|
|Family medicine physicians||US$205,590 per year|
|General internal medicine physicians||US$201,590 per year|
Source: US Bureau of Labor Statistics
Pay off more than just minimum balance
It’s tempting to pay off only the minimum balance on your student loan debt, but if you can afford it, pay more than the minimum to help you get ahead when you can afford it.
This may mean cutting back on some luxuries like colouring your hair, frequent visits to your neighbourhood watering hole to eating out at fancy restaurants, but these sacrifices mean you’ll pay off your student loan faster.
Just make sure that there’s no penalty for paying off your loans early than the stipulated time frame.
Refinance your student loan
This sounds like a good thing that will help you save money, but it’s not always the case.
According to Cappex, “ Refinancing student loans with a longer repayment term might reduce the monthly payment, but this will actually cost money in the long run.
“Refinancing also might increase the average interest rate. If you have multiple student loans, you can save money by targeting the highest-rate loans for quicker repayment instead of refinancing the loans.”
Narrow the pay divide
Have you heard of situations where a coworker was paid considerably less than their peers despite there being no reason for the discrepancy, be it in their qualifications, workload, or work experience?
If your salary isn’t stacking up with your colleagues, it’s time to narrow the pay divide.
Salaries are a touchy topic, but Caitlin Boston, who had over US$200,000 in student loans and could not afford to cut back on her lifestyle anymore, told BuzzFeed News that she realised that she could get paid more by asking her peers – especially male ones – if they were making over or under a certain amount.
“‘OK, I’m going to give you a number and I want you to tell me if you make over or under that number.’ And I said a solid six-figure number. And he said, ‘Under.’ I went down by US$10,000. He was like, ‘Over.’ And that was all I needed. I was, like, well, there you go, I’m making at least $20,000 a year less than you. This coworker had the exact same job background, and the exact same master’s degree, and a similar time at the company as me. There was no reason for this kind of pay discrepancy,” she told BuzzFeed News.
Get a side hustle to supplement your main income
Realistically, there’s only so much you can do to keep your expenses low. Instead, once you’ve found a steady job, you might want to consider getting a side hustle for your weekends or on weeknights to supplement your main income.
For some, this could mean spending their evenings and weekends doing part-time gigs, be it freelance writing and marketing, and the like, and putting this money aside to make a dent in your student loan debt.
It’s also a great way to build new skills while holding on to a full-time job.