How to Get Rid of Student Loans in 5 Easy Steps

get rid of Student LoansIf you are one of the thousands of recent college graduates you could be facing a mountain of student loan debts that you have no idea how to pay off. A decision on how to get rid of your student loans should be made before you graduate but if you are seeing that your debts are still huge even after you made small payments while still in college, you need to take serious measures to ensure that you can pay the debts and enjoy your first few years of your career at the same time.

Get Rid of Student Loans Step 1: Assess How Much You Owe

Most students have multiple student loans and have trouble keeping track of them. Some people do not have a clear grasp of their loans which is one reason why getting started on the process of managing their finances to pay the loans becomes so hard to do. The first step to getting a clear picture of how much you owe would be to see how many loans you have and calculate the total cost of your loans. This is the first step to creating a budget and a schedule of payment.

An easy way to do this is to use an amortization schedule calculator. By entering in a few pieces of information, you will see a breakdown of your payments and how long it will take you to pay off your student loans.

Get Rid of Student Loans Step 2: Consolidate Your Loans

Once you have a clear idea of what kind of loans you have and how much you owe from each creditor, it is important that you consolidate at least some or all of your loans. Student Loan consolidation is one of the best ways to make payments easier on yourself. Federal loan consolidation is especially attractive for those with student loans since you have the opportunity to avail of forgiveness programs that are only open for student loans. Federal loan consolidation may also provide you with lower interest rates. Of course, there is always the advantage of having to deal with only one creditor instead of making multiple payments. You lessen the paperwork and you save more time.

Get Rid of Student Loans Step 3: Create a Schedule of Payment

A schedule of payment is essentially a calendar showing when you should make the next payment. Creditors usually provide a schedule of payment but most of them are pretty flexible in taking the borrower’s ability to pay into the account. Borrowers can work with their creditors to create a schedule that works well for both. Take note that creditors may impose penalties for missed payments so a good advise would be to create your own schedule for setting aside money for each payment to ensure that the money is ready on the due date. This is very useful for those who tend to forget to pay their loans on time.

Get Rid of Student Loans Step 4: Deduct Your Interest Costs From Your Taxes

You can save a couple of hundred dollars by deducting the interest costs from your student loans from your taxes. These are regarded as adjustments to income so there is no need to itemize their deductions in order to qualify. A taxpayer in the 25% tax bracket can save up to $600 dollars and up in deductions.

Get Rid of Student Loans: Step 5: Live Below Your Means

This is perhaps the most effective way to save more money that you need to pay off your loans. If you have your loans in order and you have calculated how much you need in order to pay your loans in a couple of years, you can take steps like cutting down on unnecessary costs. Avoid making unnecessary purchases, limit your credit card use, eat out less, and just find more ways to spend less. Although this will take a lot of practice, this will allow you to get rid of student loans within your time frame.

Student loan debts are no laughing matter. If you are just starting out in your career you could end up spending the bulk of your income for debt payment. To enjoy the fruits of your labor now, you need to take efficient and effective steps to deal with your loans the fastest way you can. Get a clear picture of your loans, consolidate, create and stick to a schedule of payment and use deductions to lessen your interest costs. Finally, live below your means so that you have more savings which you can use to get rid of student loans quicker. By following these steps you have a fighting chance of getting your loans paid off in one to two years and a good chance of enjoying a debt-free life as you start your career.

My name is Kevin Watts and I am the creator of www.graduatingfromdebt.com. I was like millions of recent college graduates in heavy debt with very little hope. With the right attitude and discipline I took control of my financial picture and now I can say proudly that I am debt free.

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Comments

  1. says

    Great list Kevin! I think step #5 is very hard, especially for new graduates. I know when I got my first few big paychecks in my first job out of college, I just wanted to spend, spend, spend! I saw all this stuff I “needed” and thought I deserved. Could have been a little wiser with my expenditures.
    Brian @ Luke1428 recently posted..I’m Having a Yak-Attack!My Profile

  2. says

    I’d like to clarify Step number Two. Consolidation CAN be a very useful tool, however in some circumstances it is a very bad idea… especially if you do it wrong.

    Another critical step is to make sure you have signed up for the right federal government repayment plan. This is a necessity for any responsible financial planning.
    Michael | The Student Loan Sherpa recently posted..529 Plan Basics: An Easy to Understand Guide to College PlanningMy Profile

  3. says

    That is spot on. I paid off my MBA student loans 2 years and 6 days after graduation and this is exactly how I did it. I lived like a college kid and kept expenses low, put every extra dollar into my loans, and maintained focus until they were gone.
    Eric recently posted..Saving Money: Summer CheckupMy Profile

  4. says

    This is what the wifey and I are currently working on. Besides the mortgage and students loans we only have one car payment. If we can get rid of the student loans things would be so much better. I agree that you need to first total things up so you know where you stand before you can tackle it. Nice post! If you live below your means and have patience it will be gone before you konw it.
    Thomas | Your Daily Finance recently posted..The Liebster Award – Being Nominated For ThreeMy Profile

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