Each year, countless seniors graduate college with a mountain of debt. If you’re sitting on a big fat pile of loans, you may be resigned to the fact that it’ll take a decade or more to shake that debt. But maybe not. Though the standard repayment period for federal loans is 10 years, new data from Student Loan Hero reveals that 69% of all borrowers manage to pay off their college debt in five years or less. If the idea of shedding those loans in that sort of timeframe sounds appealing to you, here are a few steps you might take to achieve that goal.
1. Move back home after college
Though not everyone who graduates college gets the option to move back home, if your parents are willing to let you live rent-free under their roof for a number of years, you have a good chance of paying off your loans sooner. Imagine you’re on the hook for $30,000 in student debt, and that it costs you $1,000 a month to rent a modest apartment in your area. Live at home for three years, and you should conceivably be able to save enough money to eliminate that debt.
Furthermore, when you live at home, it’s not just rent you get to save on. If your parents are kind to you and are willing to give you a totally free ride, you’ll save on heat, electricity, water, and cable as well. All of these additional expenses can eat away at your income, so if you’re not paying them, you have a great opportunity to get out of debt more quickly.
2. Work a side hustle on top of your regular job
When you’re relatively new to the working world and are struggling to get used to a 40-hour-a-week schedule, the idea of taking on a second job might seem downright absurd. But if you really want to make headway on those outstanding loans, a good way to accomplish that feat is to get a side hustle on top of your regular job.
If you’re unable or unwilling to move back home after college, that side hustle might spell the difference between paying off your student debt quickly or having it hang over your head for years. That’s because entry-level salaries generally don’t buy you much wiggle room to save money each month once you’ve tackled your living expenses. However, if you work a secondary gig, that’s money that was never earmarked for expenses, which means you should have no problem using all of it to pay down your debt.
3. Delay other costly goals
In an ideal world, your student debt wouldn’t get in the way of major life achievements. But the reality is that paying off your loans quickly might mean putting other aspects of life on hold. According to Student Loan Hero, 43% of borrowers delayed buying a home and 15% put off parenthood to focus on their student loans instead. If you’re willing to wait on other goals for the peace of mind that comes with ridding yourself of student debt, you’ll probably manage to shake those loans sooner.
That said, there are two goals you should never delay, even if you have a whopping student loan balance to deal with: emergency savings and retirement savings. Building an emergency fund should trump all other financial goals you have, and you should aim to contribute to a retirement plan while simultaneously chipping away at your debt to give that nest egg adequate time to grow.
Paying off your student debt ahead of schedule will require some sacrifice. The good news? The sooner you shake that debt, the more flexibility you’ll have with your income, and the better you’ll feel about your finances on a whole. And that’s reason enough to make knocking out your debt a top priority, no matter what it takes.
