One thing we know about millennials and student loan debt—it’s there, it’s growing and for many, it’s out of control.
Some have opted to live home longer, take a second job, and even ask for a raise to help diminish the burden of student loan debt.
Research from the National Financial Capability Study shows that two-thirds of millennials have at least one source of long-term debt outstanding, and 30% have more than one. With the average borrower carrying more than $35,000 in student debt, paying it down isn’t easy, but it’s doable. Here are some strategies to follow.
Consolidate multiple loans. This process takes multiple loans and combines them into one, often with a lower rate and/or monthly payment. If you have federal loans, go to Studentloans.gov. If you have private loans, talk to your bank for options. Any cash flow that is freed up should be applied to the principal of the new loan for a faster payoff.
Defer the loans. A deferment allows you to stop paying on the loan for a period of time, typically three months at a time up to a year. Take the money saved and pay off smaller debts so when the loans come out of deferment, you can apply the cash flow to your loans. During a deferment, the government may pay the interest, but if it doesn’t you should so as not to accrue more debt.
Ask for forgiveness. If you are employed by the government such as the military, work for certain types of nonprofits, or teach or practice medicine in low-income communities, you may be eligible to receive loan forgiveness. To see if you qualify, click here.
Pay extra. If you’re living at home, great! Negotiate a deal with your parents to funnel all or a portion of your rent toward the loans. If you’re paying $500 per month, that’s $6,000 a year. Not an option? Take on part-time work through sites like flexjobs.com, indeed.com and snagajob.com.
Whatever you decide, pay off the debt off as soon as possible to free up your cash flow for the future.
Tanisha A. Sykes is a writer and editor in New York City. Follow her on Twitter @tanishastips.
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