Now that class is back in session, let’s analogize: September is to school as school is to student debt. And student debt is to hindrance as peanut butter is to jelly.
America is currently hefting $1.75 trillion in student debt on its back. This financial burden leads students everywhere to wonder just how much financial freedom their debt-laden shackles will afford them. The answer? Not much.
According to a 2019 study conducted by Bankrate, student debt is holding American adults captive from reaching fundamental milestones like purchasing a house, a car, or starting a family. Of the 3,885 participants, 34% confess that they are delaying building their emergency savings, and 29% are delaying saving for retirement.
Instead of propelling people forth towards “adulting” confidently, student debt despair imprisons prospective students and college graduates with a gripping sense of financial insecurity.
Here are five tips to help you make like Andy Dufresne from The Shawshank Redemption and dig yourself out of a hole commissioned by institutionalized debt.
Tip #1: Start Saving
Opening up a savings account can undoubtedly set you up for success, especially if you dedicate a portion of your savings to your loans. Try opening a savings account that accrues interest over time, like a Quontic High Yield Savings account, so you can build up your savings without even having to think about it.
Better yet, open a Money Market account. Not only does this type of account accrue interest over time, but it also staves off the temptation to continuously withdraw funds whenever you want. Money market transactions often heed to a limited amount of withdrawals per month. Transaction fees apply if you go beyond the monthly limit, so this added penalty may actually help keep your priorities on point.
Not sure how much you need to save? Quontic’s free College Savings Calculator can help you estimate what college may cost.
Tip #2: Set Up Automatic Payments
Tip #3: Pay More Than the Minimum Balance
Paying more than the minimum balance on your loans—even occasionally—chips time off of your student loan “sentence.”
The more you pay, the less your overall balance is, and the less your overall balance is, the less time it will take to pay the loan off. Plus, paying more than the minimum balance due for the month is like exhibiting good behavior—you’re credit score is likely to be rewarded with a boost.
However, only pay more when you can afford to! Be sure that you can come up with your minimum balance AND have room to pay for other expenses and bills. You never want to swap this month’s rent for an extra loan payment.
Tip #4: Refinance
Tip #5: Choose a Company that Offers Loan Assistance
If you’re fresh and jobless right out of college or if you’re looking for a change of pace, search for jobs that offer loan repayment. Companies that provide this kind of perk will help you pay off your debt just by working for them (while paying you)! That’s a win-win if you ask me.
Sometimes the smallest things can make the most significant difference in repaying your debt. Strategizing your savings plan and researching your repayment options may help you get that much closer to sweet, sweet student loan freedom.
This is not financial advice, nor should it constitute or be construed as instruction for any individual reader, or group of readers, to act or make a decision in any financial capacity. Seeking independent, professional consultation from a qualified and licensed expert is always the optimum avenue in making financial decisions.