Hey All! I’ve been hearing a whole lot about student loans recently. It’s apparently a pretty big topic and point of contention, especially for Millennials. From my research, I gathered a couple of key points about student loans that I would like to throw at you. First, tons of people in college are taking out student loans; in fact, millions of people are taking out loans! The cost of college is huge, and it has grown considerably over the past few decades. Finally, people are struggling to pay them off whether it is through sheer ignorance or unfortunate financial inability through lack of income or a job in the first place.
Well, there are a few decent things to take from all this. For starters, student debt is just debt, and that is certainly not new. In fact, virtually everyone has debt in some way or another whether it is a mortgage or auto loan. People have been paying their debts off since before even paper currency was invented. Look, we’re all still here! Maybe that is why so many people think millennials are complainers!
Well, let’s not make light of a tough situation. It isn’t good. There’s a whole lot of debt to be repaid (tax dollars for the most part), and Millennials are encountering a lackluster labor market. That’s a bad scenario to say the least. Luckily, I have a few tips to put out there. I hope you can learn something or at least reaffirm what you already know.
Make Larger Monthly Payments
This is one of the most basic ways to kill debt. Just start paying more of it off each month! If you can devote 50 percent or 100 percent more each month, then you have less debt to worry about later. In simple theory, if you were to ramp up your payments 100 percent, then you should be able to pay off your loans twice as fast. Additionally, the interest accrual rate is lower since there is less for interest to build on with a smaller principal balance.
It sounds so simple in theory, but I did mention the struggling labor market. So paying more sounds like a great idea, but if you can’t find a job or devote more money out of your budget, then you may be out of luck. At any rate, any little bit extra helps, so try to pay more!
Refinance for a Lower Interest Rate
Student loan refinancing is a pretty powerful method for dealing with student debt. Here is a simple breakdown on how student loan refinancing works. Student loan refinancing is currently offered by private lenders only. You go to them and apply for it. If you qualify depending on your credit worthiness, then you can obtain a new loan with a lower interest rate. Keep in mind that the interest rate will only be lower if you have good credit. So you have just one loan now which means that you will handle just one payment each month. But the true benefit to student loan refinancing is obtaining a new interest rate on your debt. A lower interest rate means you will have less to pay on your loans overall during the life of your loan.