Obtaining a legitimate college degree is an expensive proposition. According to a recent Edvisors education survey, the average college student graduates with $35,000 in student loan debt. And that’s not counting people who attend graduate school. Many will be paying off student loans — month after month, year after year — for decades.
The good news? With smart financial management, graduates can liquidate their college debt in a reasonable time, freeing up cash for other priorities. Here are four tips for paying off loans quickly and efficiently:
- Create a budget. Get a handle on where money is going. A budget can help prioritize, enabling you or your child to whittle down student loans more quickly. Several online tools are available. You can even use a simple spreadsheet listing monthly income and expenses.
- Ask your employer. Your company or your child’s company may offer one-time loan payoffs in exchange for a lower starting wage or other concessions. Negotiate when interviewing. After taking a job, check with the human resources department about options.
- Sign up for auto-deductions. Reducing payment steps makes it less likely to divert those funds to lesser priorities. As an added bonus, you or your child may develop the discipline to live on less while loans are being paid off.
- Reduce your other bills. Talk to your cell phone provider. Postpone that expensive vacation. Hold off on the latest-and-greatest electronics. Instead, prioritize student loan payments. It’ll be worth it when you or your child can enjoy the benefits of a rising salary, increased cash flow and a stellar credit score in a few years from now.
Don’t forget to take advantage of possible education tax credits and deductions. Give Carl Heinemann, your Chattanooga CPA, a call for help determining what tax breaks are right for you.