Nearly three out of every four students graduating from a four-year college or university will have some sort of debt. Despite the fact that college is supposed to be some of the best years of your life, paying off your student debt after you have graduated can seem like a mountain too big to climb for many.
According to a recent Forbes article, the average student graduating from college has over $37,000 in student loan debt. This number is expected to continue increasing due to the constant hikes in college tuition throughout the United States. Whether you have graduated or are about to graduate from college with debt, there are ways to help you manage the financial burden.
Example 1 on How to Pay Off Student Debt:
Susie went to a four-year state school. Fortunately, she had academic scholarships to help pay for schooling, and she also lived at home during the four years. She graduated with $10,000 in student debt. Susie was able to get a job right after school in the town where she went to school and where her family lived. She continued to live at home and made a budget. Susie focused on keeping her expenses low and used every bit of extra money she had left over in her budget to pay towards her loans. Most importantly though was that she included a category in her budget for paying off her student loans each month. She devoted $500 per month towards her student loans. Because of her frugal living and her devotion to get out of debt, she was able to pay off the entire balance of her loans in less than two years!
Example 2 on How to Pay Off Student Debt:
After graduating high school, Chris decided to attend a private university to continue his studies. The tuition at his university was expensive, but with the help of aid and an alumni scholarship he was able to limit the costs. Regardless, Chris graduated with $45,000 of student debt after it was all over. Chris accepted a job with a non-profit after graduation. Even though he wouldn’t be making much money, he felt a calling to do something he passionately cared about. Because of his situation, a high amount of student debt and a low salary, he enrolled in an Income Based Repayment Program. This allowed Chris to avoid the high monthly payments his loans would typically have required him to pay and instead allowed him to pay a small percent of his income every month. Even with this program, Chris still had to create a budget, but the repayment of his student loans was not as high of a priority as it was for Susie. Nonetheless, Chris was able to still live comfortably, doing what he loved, while also meeting his student loan obligations.
The examples above illustrate a couple of real-life situations that people face when paying off student debt. To some, paying off the debt is a very high priority. To others, not so much. Only you can decide how quickly you would like to pay off student loans. The commonality that both Susie and Chris shared in both examples was that they created a budget. Susie created a budget that allowed her to aggressively pay off her debt. Chris created a budget that allowed him to live within his means but also meet his payment every month. Regardless of which category you fall in, creating a budget is a great foundation to tackling any debt, especially student loans.
Budget & Invest News
Join our mailing list to get the latest news from Budget & Invest.