The typical loan balance for borrowers of student loan is $28,950. That’s a substantial chunk of money, and you may have to pay this obligation for a very long time. But it’s not necessary to be.
In fact, if you put a few easy methods in place, you might be able to get rid of this debt in just five years.
Accelerate Your Student Loan Repayment
Making additional payments is one strategy to pay off your outstanding student loan total in five years.
Imagine, for instance, that you had a sum of $28,950 on average, with a 5.8% interest rate, the standard rate for all student loan debt (including both federal and private loans).
Your monthly payments would be about $318.50 if you had 10 years left on your loan. On the other hand, you could add an extra $200 to each monthly payment if you wanted to be debt-free in five years.
That’s a significant sum above the minimum, however, there are ways to find additional money, such as:
- maintaining a frugal lifestyle with roommates in an affordable apartment while limiting your expenditures till your debt is settled.
- If possible, consider spending a little period of time with your parents following graduation.
- Taking additional part-time work for a few hours each month to earn $200 more to pay your student loan lender.
These little sacrifices might be worthwhile if you can pay off your college loans and recover your lost income.
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Unlocking the Path to Freedom
Another way to pay off your full debt load within five years is to refinance your student loans. By switching existing debt to a new loan with a five-year payoff period, you may be certain that you will meet this goal.
Due in part to the CARES Act legislation, which permitted businesses to contribute up to $5,250 in tax-free debt repayment aid per employee each year until 2025, more firms are now providing student loan assistance programs.
Perhaps, by using any or all of these strategies, you can pay off the entire balance of your outstanding loans in five years (or less).
Regardless of whether your number is higher or lower than average, it may be worthwhile to look into ways to pay off this debt as soon as possible so you may put more of your money toward retirement savings or other significant goals.
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