For every parent that bribes a university to admit their under qualified child, there's thousands of students striving to earnestly get an education. With the rising cost of college, comes the rising balance of student loan debt. Currently, more than 44 million Americans owe more than $1.5 TRILLION dollars in student loans!!
All told, 80% of Americans have debt, there’s no reason to feel ashamed. Just be realistic.
I don’t want young earners to focus so much on paying off debt that they neglect their retirement savings. Student loans usually carry a relatively low-interest rate (3-6.5%), this means you should continue chiseling away at the balance while tending to long-term financial goals.
1. Set up an automatic contribution to your 401k, Roth IRA or whatever the program is you’re using for retirement. Contribute enough to received your employer's match and gradually increase your contribution each year until you're meeting the IRS Limit ($19,000 for 401k, $6,000 for IRA, higher for Self-Employed IRA).
2. Next setup automatic payment to your student loan provider.
When you choose your payment plan, keep in mind - Income-based repayment plans are flawed because interest can accrue and the balance that you owe can compound over time. It’s messed up.
Then there’s the whole debt forgiveness thing, but I wouldn’t hang my hat on that as a plan for getting out of debt. More than 49,000 people applied for student loan forgiveness last year. 206 received loan forgiveness. For you math wizards, that's less than .5% of the applicant pool. Srsly.
If your interest rate is high and your credit is good, consider refinancing. Chances are refinancing could make your payment more palatable.
Try to pay as much as feasible or take up a side hustle to get more income and make a big dent in the loan balance. Once you have the monkey off your back you can get on track for other financial goals such as a home purchase, a sabbatical or a big party.