In attending various financial events as a speaker or vendor, I have noticed that one of the hottest topics today, especially for millennials, is student loans.

Unfortunately, we cannot live the 1950s life where you went to college for 4-years; graduated and found work at a great company with great pay, great benefits, and great pensions. College tuition was much cheaper back then and paying off student loans did not seem so insurmountable. Fast-forward to 2017 and things have surely changed. 

Back in the 50’s, a bachelor’s degree was the standard of excellence.  However, in today’s competitive job market, you have to go the extra mile and obtain even more degrees, which often translates into higher loans. 

In addition to all this education-related debt, we also tack on other types of financial responsibilities that add more debt to our portfolios.

As a result, this does not leave much to pay down our loans.  With such an alarming trend, how do we manage our student loan repayment today? Some people handle their student loan debt by deferment, forbearance, or switching to income-based plans. These options do help in the short-run, but in the long run, it will cost you more. 

With income-based repayments, you will pay more over time than under the normal 10-year plan as reported on studentaid.ed.gov. Some student loans that are deferred or are in forbearance still accrue interest.

Earning a high income does not guarantee you can repay your debt.  Many who earn large salaries are still in as much debt as those who earn less.

Here are a few modest steps I took to keep the interest at bay, decrease the life of the loan, and ultimately pay in full. You can do the same. Create your repayment plan before the loan is due and stick to it.

Plan to pay the loan before it becomes due.  When I was informed that there was no prepayment penalty, I started sending in payments while I was still in school.

During the 1st degree I was unemployed and could not pay much, but I sent what I could afford on the unsubsidized loans as they accrue interest from day 1.

After graduation and gaining employment, send extra payments at least twice a year. When payroll is bi-weekly, there are two months during the year when there is a third paycheck in the month — use them wisely.  Also, if you can earn overtime, earmark those extra funds towards the repayment of your student loan.

Keep your vehicle once it is paid off and use those extra funds to pay down student loan debts. If the average car note is about $350, you can take just $200 of that money to make additional payments and decrease your loan amount by an extra $2,400 annually.  Be sure to inform the loan company to apply the payment to the principal amount and not advance your due date. Advancing the due date may allow you to skip a payment, but your loan still accrues interest.

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