There are big questions and concerns going around involving how to pay off student loans. The great news is that there are already proven ways to pay your student loans.
You have come to the right place because regardless of what age or level of education that got you into debt there is a way out.
The chart below, according to the Federal Reserve, shows the different ages group and the acquired debt from different levels of education from some college classes to a graduate degree.
When looking for ways to pay off your student loans its important to understand the techniques around paying debt off. In this article, I will discuss the fastest way to pay off your student loan which are:
-Focus on Earning more money
-Get into a loan forgiveness program
-Refinance loans
-Make extra payments & Calculate how long it takes to pay off debt
Focus on Earning More Money
This is not always easy upfront but I can tell you it can be the best route long term. When you decide to increase your income and you do once you can do it again and again.
There are techniques to earn more but ultimately it doesn’t matter as long as you achieve your goal. To focus on earning more you should leverage options from changing jobs, becoming more productive and having a small business or side hustle.
When your already a high-income earner all you have to do is cut expenses and save to pay debt off. However, when you are not a high-income earner it sucks but you will have to do more and work harder. Trust me the benefits are worth it.
I was one unemployed years ago with student loans and bills due each month. I went from unemployed to a low paying job then to another job with more pay then again to a higher paying job.
My salary now keeps increasing as long as I follow the same techniques I used before to make more money. I increased my income by 71% in 1.5 years. I did this because mainly I set it as a goal on paper to earn more then made plans.
For example, when unemployed I said at first I need a job to pay basic needs so I spent 8 to 12 hours a day applying and following up with jobs and sometimes even went in person to speak with the hiring manager even if I wasn’t told anything.
Once landing a low paying, from there, I did the same thing moving forward, this is a high productivity technique by the way, so I kept applying for more jobs at high volumes.
One day as I was working I got a call for a interview then a few weeks later was offered the position.
This told me that being highly productive with jobs searches increases your odds of making more money. Once at this job, I did it again and applying for jobs at scale but focused in an area where I saw huge income growth potential which was truck driving. It blew my mind to see that you could literally being making $40K to $70K or more as a truck driver in a few months or a couple years.
I got my Commercial Driving License and then my salary doubled and then kept increasing because you can jump jobs and make more money easily in trucking. Here, I focused a lot on changing jobs and being highly productive but having a small business helps to.
The purpose of focusing on earning more is to use everything at your fingertips including jobs, businesses, temporary work, etc.
Once I got momentum and was making more, I started a blog and signed up to freelance marketplaces. In summary, to increase your income and concentrate on earning more you must first set goals on paper so you have clarity then make practical plans to make it happen.
Set the bar high. Why not aim to become a millionaire.
Learn here: 6 Ways to make money: How Regular people are becoming Millionaires.
Additionally, click this article here for a complete guide to wealth creation that yon can leverage to pay down your debt faster. This is a must read or you may miss out on paying off your debt faster.
Next Steps:
- Set goals on paper & decide exactly how much more money you wanting to earn
- Choose what category does it fall under (Changing jobs, side hustle, etc)
- Attain the exact knowledge needed to make this happen (Books, free content, guides, etc)
- Spend 60 to 80 hours a week on completing goals while continuing to learn more
Get Into a Loan Forgiveness Program
A loan forgiveness program is meant to help you with your student loans. They are many of them out there but here I only will focus on the one that I have used.
The loan forgiveness program was through the national government and it was a “Pay as Earn” mechanism. What this meant for me is that if I was expected to pay $500 a month to my loans for college I would have to pay that unless I was in the program which base my payments off of my salary.
My salary at that time, not now, was low. I either had no job or was making $12 a hour so upon being in program with a salary that low I didn’t have to pay anything. Yes you heard right my payment was $0 every month.
Instead of paying $500 a month I didn’t have to pay anything. If I was not in the program even with a low salary I would still be expected to pay the $500.
Being in program helps make things easier for you. Some cases a person must pay $500 but because their salary they are only told by the government to pay $75 a month. Still better then paying $500 a month.
I did have to pay a upfront fee that was around $1000 but it is still worth it because at the end of the program you will not have had to pay the student loans in full.
The program makes you recertify annually, so this means that the government pulls your last year’s take returns to see what you made and then tell you what you must pay each month until you have to recertify the following year.
The program I was in does this for a period of 20 years then then I pay taxes on the remaining balance and the rest of the debt was forgiven completely.
Check out the numbers below as an illustration. Ill use the average amount of student loan debt after college or school.
Student loan debt 35K in year of 2020
Salary $25K Gross Income
I assume the person here keeps the same job and income for 20 years. The loan forgiveness program by government says $75 a month is what must be paid.
$75 x 12 Months=
$900 x 20 years= $18K
$35K – $18K = $17K
If you have to pay a 15% tax on $17K then once you pay $2550 the remaining $14,450 is forgiven completely in the year 2040.
It is critical to understand these programs but even more if you educate yourself on how to build wealth this has an everlasting impact on your decisions and will help you pay off loans and have real wealth at the same time.
Learn the Basics of Wealth Creation.
If you’re trying to figure out where to start regarding building wealth, because it is all related to paying debt down faster, look into this article this explains how and where to start budgeting and investing.
Next Steps:
- Explore different loan forgiveness programs
- Call and speak with people who work at the loan forgiveness programs you are targeting for more information
- Apply for program
Refinance Loans
The whole point in refinance loans is to get better terms for yourself. With auto loans a person may want a lower interest rate and lower payments and if you qualify from institutional criteria you can be granted better terms.
It is similar with student loan debt refinancing. A student may desire lower interest and a lower monthly payment. If student qualifies that will be granted this from their application is refinance loans.
Different institutions have different criteria and may can handle your debt so they profit, because they still make money from you from interest, and help relieve some the burdens placed on you while you’re working to pay off your debt.
People refinance for difference reasons sometime a person life has changed that causes a major swift in the life like a newborn, catastrophic loss, disabled, etc.
When looking to refinance spend a couple of hours reading so you can have a basic understanding of the process and develop questions before you apply.
Next Steps:
- Explore different refinance loans
- Make a list of institutions to contact for more information
- Decide which institution to apply to then apply
Make Extra Payments & Calculate How Long Until Your Debt is Paid Off
Making extra payments to pay off student loan debt can move things along faster. When you have a certain amount of student loans to pay off each month by increasing your amount that you use to pay loans naturally speeds things up.
If you’re really aggressive you can pay off debt even faster. If you are in $35K student debt and you live frugal and save $8K a year then in 4.3 years that is $35K so now your debt is gone. If your more aggressive and save $12K a year then your debt is paid off in 2.9 years.
Not bad right. The point is to know the numbers and at least have an idea of how long it will take to pay off debt. What is frustrating is if you know the numbers but your pay is not enough to pay debt off in the fastest way you would prefer.
There is a solution for all of that. One of the things I mentioned before is to focus on earning more money as this is sure to help you pay off your debts on your own time frames.
When making extra payments learning how to create wealth contributes to your ability to pay debt off and how fast you can pay off debt.
Check out these amazing books on wealth creation for quick jump starters.
Case Study: Man Pays Debt Down in 2 Years
One man paid off his student loans by living frugally and channeling every dollar into student loans.
Next Steps:
- Analyze your annual income in relation to how much you would like to pay more each month
- Write out the numbers that show if you paid “X” amount in student loans each month then your loans would be paid off by what time frame
- Make a list of 20 ideas that will help you pay off your loans faster
Conclusion:
In total, when paying off your student loans faster there needs to be full assessment of your student loan debt and your annual income. Next, there needs to be a strategy set in place to fulfill your goals of paying your student loans off faster. The people who pay their loans off the fastest are in some way making moves to raise their income so they can channel excess cash to paying off debt or any other tactic that involves crushing debt. Others may already have a high salary and can make slight adjustments and be ok but most are not in this position.