If you are like most people in America that have a college degree, chances are you have a sizeable amount of student loan debt. With today’s astronomical costs of getting a degree, most undergrads are financing their way through college to the tune of thousands of dollars. The good news is that if you are enrolled full-time in college or university you don’t need to make regular payments when you get a student loan… yet, but the minute you graduate, that will change.
The average amount of student loan debt for a four-year degree in the United States has reached just over $37.1K in 2016. Looking at average entry-level salaries for most graduates with non-specialized degrees, the outlook for paying off your student loans anytime soon can be grim at best.
The average salary right out of college in the US is hovering around $40k for liberal arts and humanities majors. Business and engineering salaries are higher, but when you stack your income against your student loans, finding a solution to your debt burden may seem like an upward battle. There are ways, however, that you can pay your total debt off in five years if you follow these tips.
- Negotiate a Higher Salary – you don’t have to accept the first entry-level job offer that you receive straight out of college. You also don’t have to accept a salary that is going to keep you in debt or propel you further into debt. If you are looking for a job in a metropolitan area like New York City, chances are you can find a higher salary level than if you were working outside the city.
- Keep Living Expenses as Low as Possible – let’s say you negotiated a higher salary for yourself and you have taken your first job. This is not the time to spend 80% of your income on sky-high rental properties or, worse yet, to saddle yourself with a mortgage payment. Try to keep your housing expenses to 30% or less of your income, and if you can reduce this by getting a roommate or two, then that’s even better. Any extra money that you have left over should go to your student loan debt fund. Look at areas with lower-than-average rent levels, or stay home (if you can) after graduating.
- Make Your Debt a Priority – this is a challenge for most college graduates. Now that you are out of school, you want to start enjoying the perks of adult life: going out to happy hours with work friends, maybe buying your first big-ticket item like a car, or getting an apartment. If you want to pay off your debt in five years, you need to make that your number-one priority over everything else. Social calendars, trips, and everything else that you many want to spend your salary on should be put on hold for now. If you can make these sacrifices now, you will be able to reduce your student loan debt in no time.
- Take Advantage of the Internet – there are several ways that you can make money online in addition to having a full-time job. You can start a side job for little to no initial investment.
Utilize anything that you make on the side to put towards your student loans. You can sell handmade crafts on Etsy, start a dropship store on a platform like Shopify, or set up a blog and review products for extra cash. You can take advantage of online marketplaces like eBay and Amazon to sell goods or earn affiliate commissions.
Another option is working part-time as a virtual assistant or a freelance writer. You can create profile on sites such as Upwork or Freelancer and take on work as you have the time. Anything that you earn in addition to your salary should go straight to paying extra on your student loans.
- Buy Only What You Need – this sounds super obvious, but if you aren’t keeping track of your expenses and you don’t have a budget, you are probably buying things daily that you don’t really need. Make it a point to save the receipts for every purchase you make for two weeks. You will be amazed at how much you are spending on extras that can quickly add up to additional money each month. Take this money and use it to reduce your debts.