8 Ways We Can Pay Down our Student Loan Debt Faster

What are the student loan pros and cons? How can we pay down our student loan debt faster? What are our options? 

Many people were holding their breaths waiting for President Joe Biden to announce student loan debt forgiveness. As the day approached in May of 2022 for the president to share what his plans were to address the crisis, he put it off until July/ August of 2022. Now granted, there are more serious things going on right now in our country. For example, gas is now $5.00 a gallon nationally. The baby formula shortage is still going on. China has announced that they will do everything to prevent Taiwan from becoming an independent nation and the US announced that they are willing to use military force to protect Taiwan. Oh, and we still have a pandemic going on and could get another wave of high cases in the fall this year. So, there’s a lot going on right now. So far these are the four options that could happen with student loan forgiveness. 

1. An Extension of the Student Loan Payment Pause: 

According to a recently published article in Forbes “A Further Extension of the Student Loan Payment Pause Seems Increasingly Possible” Biden officials have been suggesting for months that the August 31 deadline is movable. And in public comments earlier this week, Secretary of Education Miguel Cardona made clear that while no decisions have been made, a further extension of the student loan pause may happen.” 

2. $10,000 forgiven per borrower

According to the Washington posts article “Latest White House Plan Would Forgive $10,000 in Student Debt Per Borrower” White House officials are currently planning to cancel $10,000 in student debt per borrower, after months of internal deliberations over how to structure loan forgiveness for tens of millions of Americans; according to three people with knowledge of the matter.

President Biden had hoped to make the announcement at the University of Delaware commencement, the people said, but that timing has changed after the massacre Tuesday in Uvalde Texas. The White House’s latest plans called for limiting debt forgiveness to Americans who earned less than $150,000 in the previous year, or less than $300,000 for married couples filing jointly, two of the people said. It was unclear whether the administration will simultaneously require interest and payments to resume at the end of August, when the current pause is scheduled to lapse.” 

3. Biden gives in and removes $50,000 in student loan debt. 

The senate’s top Democrat, Chuck Schumer of New York and Senator Elizabeth Warren of Massachusetts have been pushing President Biden to cancel at least $50,000 for all.

4. President Biden get cold feet and decides to forgive nothing

This is less likely, but I wouldn’t be surprised if the President gets cold feet and based on all the issues we have right now, says “I don’t have the authority and I will not be forgiving student loan debt.” 

Based on listening to the pros and cons of student loan debt forgiveness. I understand both sides of the argument. If you asked me, what do I think he will do. I would say there will be a longer pause until they figure out inflation and then he might consider forgiving $10,000. In the meantime, however, there are things we can consider doing to help pay down our student loan debt faster and get some relief when payments resume. 

BUT FIRST….

How can student loan debt affect us? 

Well, student loan debt can be a huge financial burden. It can make it difficult to purchase a home, start a family, or even save for retirement.  There are pros and cons to student loan debt, and it’s important to weigh all your options before taking out loans. Make sure you understand all the terms and conditions of your loan, and always consider your ability to repay the debt before borrowing. 

What are some pros and cons of student loan debt? 

Pros: Student loans can help us finance our education and attend some of the great universities available. Student loans also offer a lower interest rate than other types of loans, making them more affordable in the long run. Student loans give us the ability to pay for an education so that we can provide for our families and help create opportunities.

Cons:  Student loans can be difficult to repay if you don’t land a high-paying job after graduation. They can also put a strain on your finances if you’re not able to make your payments on time. Student loan debt is not dischargeable in most cases when filing for bankruptcy. Also, student loan debt can make it difficult to purchase a home. 

What can we do if we’re struggling with student loan debt?

If you’re struggling with student loan debt, there are several resources available to help you get out of debt and start living a financially healthy life. Talk to your lender about repayment options, consider consolidation or refinancing, and look into government programs that can help you get out of student loan debt. Here are some effective strategies to pay down student loan debt without government programs. 

1. Budget

One of the first steps we can take to paying down our student loans is to create a budget. First, we must determine how much money we have coming in each month and what our regular expenses are. We can create an excel spreadsheet, use an app, or just simply use pen and paper. Some bank apps show us how much of our money is being allocated to specific areas. This can help us to quickly identify our expenses. After we’ve created our list, we can see where we can cut back in order to put more money towards our student loans.

2. Consolidate your loans

If you have multiple student loans, it may be helpful to consolidate them into one loan. This can make it simpler to manage your payments and may even get you a lower interest rate. A lower interest rate can help us save money over the life of your loan and help us pay it down faster. Another option that we have when we consolidate our loans is to extend our repayment term. Extending our repayment term will make our payments more affordable however…the interest rate will most likely be high. Please be sure to speak with the student loan provider to figure out if consolidating your loans is right for you. 

3. Get a part-time job

 Working a part-time job while you are in school can help you lessen the amount of debt you have when you graduate. Even if you only make a few hundred dollars each month, that can add up over time and make a big difference. We can use the money from our part time job to apply to the principal of our loan to knock down the balance. 

4. Start paying off your loans early

The sooner you start paying off your student loans, the better. The longer you take to pay them off, the more interest you will accrue and the larger your overall debt will be. If possible, start making payments on your loans while you are still in school. 

5. Automate 

One of the best ways to stay on top of your student loan payments is to automate them. This way, you can be sure the payment will be made on time each month. Some Federal student loan services off an interest rate discount if we enroll in autopay. 

6. Pay more than the minimum payment

 If you can afford to, paying more than the minimum payment each month will help you pay off your student loans faster. Each additional amount you put towards your loan will make a difference in how quickly it is paid off. Also, we can make biweekly payments. By paying our student loans biweekly this can possibly help us make double the payment each year on our loans. 

7. Home Strategy- 

Many don’t talk about this strategy openly, but this strategy has been going on for quite some time. The home-strategy is a way that some have been able to pay down debt and save up to invest. Essentially, if a graduate moves back home after graduation and finds a job, they would use the money from their job to pay down their student loan debt instead of using a chunk of their income to pay for rent, utilities, etc. One common mistake that we make is settling down right after we graduate instead of taking some time to create a financial plan of action. Moving away from family can be costly and takes a chunk of our income. By moving back in with parents or family members, we can save a lot of money and use that money to pay down our student loan debt.

8. HELOC

This can be very risky, but I’ve heard that this was an option as well for homeowners with student loans. Please speak to a financial advisor to see if using a HELOC (home equity line of credit) is right for you.

A HELOC can be a great option for consolidating and paying off high-interest debt. However; there are a few things you need to know. First, it’s important to understand how a HELOC works.

A HELOC is basically a second mortgage on your home. You’ll have to qualify for the loan based on your income and credit history, and the lender will place a lien on your home. The good news is that interest rates on HELOCs are usually much lower than those on student loans. Once you’re approved for a HELOC, you’ll be given a credit limit. You can borrow against that limit as needed. The interest rate on the loan will usually be variable, so it’s important to keep an eye on it.

When you use a HELOC to pay down your student loan debt, you’ll need to make sure that you’re making payments on time and in full. Otherwise, you could end up damaging your credit score and jeopardizing your home equity. Some have used a HELOC to help pay down their student loan debt faster and save a boat load of money on interest. 

**Remember to speak with a financial advisor. Everyone’s situation is different so weigh the pros and cons! 

So, what are some student loan forgiveness and payment programs? 

1. The Public Service Loan Forgiveness Program. This program forgives student loans for those who work in public service. To qualify, you must make 120 monthly payments while working full-time for an eligible employer. 

2. The Teacher Loan Forgiveness Program. This program forgives student loans for teachers who work in low-income schools or subject areas with a shortage of teachers. To qualify, you must have taught for five consecutive years. 

3. The Perkins Loan Cancellation and Discharge Programs. These programs forgive student loans for certain groups of people, including teachers, nurses, and members of the military. 

4. The Income-Based Repayment Plan. This plan allows you to make lower monthly payments based on your income. If you make payments for 20 or 25 years, the remaining balance may be forgiven. This depends, however, on when you took out your loan.

5. The Pay as You Earn Repayment Plan. This plan is like the Income-Based Repayment Plan. However, it’s only available to people who took out loans after October 1, 2007, and who received a disbursement of their loan after October 1, 2011. 

6. The Loan Consolidation Program. This program allows you to combine multiple student loans into one loan with a single monthly payment. This can make your payments more manageable and may help you qualify for other repayment plans.

Conclusion: 

Student loan debt is a huge issue in the United States. There are both pros and cons to taking out loans for education. However, there are strategies that can be used to pay down the debt faster. Remember student loans have both pros and cons. Depending on your individual situation, you may be able to pay down your debt faster using one of the strategies we’ve outlined, or some not currently listed. We hope this information has been helpful. Please share any tips or strategies that have worked for you in paying off your student loan debt.  Check out my other blog 6 Debt Traps to Avoid