Student Loan Debt Is Bondage - Here's 7 Ways To Set Yourself Free (2024)

HOW TO PAY OFF STUDENT LOANS – 7 SMART STRATEGIES

People tend to argue that the price of a good education cannot be compromised while some millennial aren’t feeling the same. As a matter of fact, many graduates are always left to face the grueling task of paying off student loans within a time frame. I know, because I have been there. With medical school, only the lucky few were able to escape the claw of the student loan. With over 200,000 dollars in loans from medical school, tack on some undergraduate loans too, one must find a way to get out of that debt dungeon.

This is why when people asked me what was my motivation, for always trying to do well in school. My reply? Student loans!! Cosigned by family member. If I fail, then I might as well not return home.

If you fall under the category of students that want to pay off student loans, there is no need to worry anymore. This article will explain how to pay off your student loan quickly. If not quickly, at least faster than you think.

These strategies are mix bag of methods for different stages of life. Many of these strategies has helped us flip topside wealth wise. Continue reading. (Check out our disclaimer about affiliate marketing and sponsors before proceeding).

Student Loan Debt Is Bondage - Here's 7 Ways To Set Yourself Free (1)

Get out of student loan debt now

Table of Contents

1. Negotiate student loan payment into your contract

My job ended up paying a part of my student loan. There were other benefits that I enjoyed too that made it worth the trade off. However, as a doctor, student loan repayment is a common part of negotiation. Especially, if you are working in a rural area, you have more room to negotiate. I have heard of instances in which student loans are paid off in totality. Just beware though; this kind of deal comes with a restriction. There is usually a stipulation that, if you leave the job before 3 years, you would have to pay back all or portions of money the company gave you. This is not limited to doctors only, I have seen nursing job that offered to pay $25,000 dollars on loan repayment.

2. Leverage your sign on bonus

The medical profession may be flawed in terms of compensation and how long it took to make decent money, however, the ability to have job security and be able to walk away during negotiation if the terms do not suit you is an awesome perk. I once saw a job posting in rural California that offered $250,000 sign on bonus. Of course, the job was swept off before I could get my act together. You would have to work in some shady condition for them to offer such an exorbitant amount, however, if that is what it takes to pay off your loans, well, one must do what needs to be done. Don’t believe me, here are some job postings with sign on bonus, including hair stylist and technicians.

I used contract diagnostics to negotiate both student loan repayment, sign on bonus and stipend. They review physician contract. They also got me a favorable severance cause. In case the job does’t work out.

3. Think of student loan like a mortgage

This is for everyone that can afford it. If you can, treat the loan like a mortgage and try to pay the larger part to cut down the principal more quickly. This is one of the best pieces of advice when planning to pay off student loans. Paying off a significant amount of the principal amount minimizes the duration of the student loan period and the interest that will be accumulated over time.

Another unique strategy that can help pay off student loans is adding payments and sending in checks every 2 weeks, instead of sending in checks monthly. Immediately the college loan is repaid, the benefits grow rapidly and you are one debt safe. Once you finish paying your student loan, any money you make can now be invested and used towards wealth building.

In fellowship, I did some extra coverage resident shifts and we paid off all of Mrs Breathe Easy’s student loans. I also paid a significant portion of my loans.

While I was doing this, many people tried to tell me that I would soon become an attending and why was I hustling so much? I know my plans and wanted to have positive net worth as soon as possible. Now as I write, we have crossed zero networth. Although we still have some low student loan at 4%, our investments have overtaken the loan. At this time, it gives me joy that we can pay off the remaining loan if we want to. My job is actually paying a portion of that loan too. That helps.

These other student loan payment tips works even if you are not a high income earner and you are serious about becoming debt free. It is better to start from college with the attitude that paying off that debt is your top priority.

4. Create a payment plan

A three to five years plan will be perfect to give you scope of when you should pay off your student loans. Having an end date gives you an insight into what you will be paying and how to make it happen. The pressure is on.

Establishing an annual budget with a time-bound goal will make you adjust your everyday life towards accomplishing the goal. Having a payment plan or budget will also make you aware that you can put more money towards diminishing the principal balance.

At the end of the timeframe set for paying off the student loan, you would have paid off the debt or you will be left with the insignificant amount to pay.

Live like a resident!! This is by far the best Mantra I picked up from white coat investor. Living like a resident has helped us pay our debt faster.

Student Loan Debt Is Bondage - Here's 7 Ways To Set Yourself Free (2)

7 ways to get out of student loan debt

5. Create a college repayment fund

This is another tip to pay off student loan quickly. Place the money assigned for paying off the student loan into an account that you can’t withdraw from easily (e.g. saving in an account that you can’t easily withdraw with a card).

This type of accounts allows you to save money for the sole purpose of paying debts. It also allows you to set aside money to grow and accumulate wealth instead of spending them on a shopping spree, expensive dinners, hangouts, and designer clothes.

6. Get a side hustle

Start paying off the debt early by taking up a part-time job while in college.One of the ways to generate money to pay for college debt is to get a part-time job while attending college itself. The part-time job allows you to offset the loan more quickly.

If you take a part-time job while in school and you are able to pay close to $500 monthly, in a year, you will be able to pay off $6000 which will move you closer to financial freedom.

For many of us, we already passed the college stage. The same principle applies. Find a side hustle and use the money to pay off your debt faster. Like I said above, I was able to pick up some shifts during fellowship as extra coverage resident. That allowed us to pay significant portion of our debts.

Also, it is difficult to get part time job in medical school, so if you can’t do it, consider other options.

7. Don’t be a victim of the usual trap

Ironically, the desire and need for instant gratification are what holds back a student from paying off the student loan quickly. Delay in the payment of student loans results in a delay in fulfilling your dreams anyways. So why not pay off that loan?

Having a better plan ahead and understanding how the mind works allow you to make sacrifices in your budget to pay off the debt.

Don’t behave like everyone around you. Ensure you maintain a financial discipline which is always a difficult hurdle for many people. Have the discipline to save and you are a step closer to paying off your student loan. Live below your means.

The people who succeed at paying off student loans are those that save and live modest lives.

In conclusion, the best way to pay off student loan quickly is to negotiate better, do more than expected; pay more than the monthly minimum. The more you pay, the less you will owe, the less the interest and the quicker you pay off your debt.

Of course, there are many more ways to pay off your student loans. There are just 6 of them. Comment on more ways in the comment section to help others.

You can download our free budgeting E-book on the home page to get started.

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Adebayo

Website

I am a pulmonary and critical care doctor by day and personal finance blogger/debt slaying ninja by night.

After paying off close to $300,000 in student loan debt in less than 6 months into my real job, I started on a mission to help others achieve the same. There is no magic to this than to strap up and get it done. Some of the ways we achieved this include side hustle, budgeting, great negotiation skills, and geographical arbitrage.

When I was growing up, common knowledge in Nigeria is that there is one thing you cannot trust anyone else with, and you guessed it – your money.

Being frugal came easily to me based on my background. However, the concept of building wealth did not solidify in my mind until when I finished medical school. I wish I knew what I know now when I was 14. Still, I don’t know enough and I am constantly learning to improve my knowledge.

My goal is to reduce financial illiteracy among young professionals. I am catering to the beginners – babies and toddlers in financial literacy.

Student Loan Debt Is Bondage - Here's 7 Ways To Set Yourself Free (2024)

FAQs

How long does it take to pay off 300k in student loans? ›

How long does it take to pay off $300k student loans? This will depend on the type of student loans you have and the repayment terms you choose. Federal student loans: It will generally take 10 to 25 years to pay off federal loans, depending on the repayment plan.

How to pay off $100k in student loans in 5 years? ›

6 steps to paying off your $100,000 student loans
  1. Choose a repayment plan.
  2. Make a budget to pay down your student loan debt.
  3. Prioritize your debt repayment.
  4. Consider multiple payments per month.
  5. Consider refinancing to change your repayment terms.
  6. Increase your income.
May 28, 2024

What would happen if we forgave all student debt? ›

Student loan debt slows new business growth and limits consumer spending. Broad student loan debt forgiveness may help boost the national economy by making it more affordable for borrowers to participate in it.

How long does it take to pay off 60k in student loans? ›

Average Student Loan Payoff Time After Consolidation
Total Student Loan DebtRepayment Period
$10,000-$20,00015 years
$20,000-$40,00020 years
$40,000-$60,00025 years
Greater than $60,00030 years
2 more rows

How much is the monthly payment on a $60000 student loan? ›

What is the monthly payment on a $60,000 student loan? The monthly payment on a $60,000 student loan ranges from $636 to $5,387, depending on the APR and how long the loan lasts. For example, if you take out a $60,000 student loan and pay it back in 10 years at an APR of 5%, your monthly payment will be $636.

What is the monthly payment on a $40,000 student loan? ›

$526.96/month
Amount Borrowed:$40,000.00
Balance After Graduation:$44,263.99
Balance After Grace Period:$45,790.44
Total Interest:$23,234.95

What is the average monthly payment on a $100000 student loan? ›

The monthly payment on a $100,000 student loan ranges from $1,061 to $8,979, depending on the APR and how long the loan lasts. For example, if you take out a $100,000 student loan and pay it back in 10 years at an APR of 5%, your monthly payment will be $1,061.

Can I pay $5 a month on student loans? ›

Income-Contingent Repayment.

At the end of 25 years, any remaining balance on the loan will be discharged. The write-off of the remaining balance at the end of 25 years is taxable under current law. There is a $5 minimum monthly payment. Income Contingent Repayment is available only for Direct Loan borrowers.

Is 70k a lot of student debt? ›

What is considered a lot of student loan debt? A lot of student loan debt is more than you can afford to repay after graduation. For many, this means having more than $70,000 – $100,000 in total student debt.

Are people refusing to pay student loans? ›

In an Intelligent.com survey conducted this month of 1,000 federal student loan borrowers, 25% said they had not made any payments at all, and 9% of those said they were holding off on paying their bills intentionally in an effort to pressure the government into canceling their debts.

How many people don't pay their student loans? ›

Seven million borrowers with federally managed loans were at least 30 days overdue on their payments at the end of 2023. That's the highest delinquency rate since 2016, as far back as the department's public records go.

What happens if nobody pays student loans? ›

Failing to pay your student loan within 90 days classifies the debt as delinquent, which means your credit rating will take a hit. After 270 days, the student loan is in default and may then be transferred to a collection agency. Keeping up with your student loan payments helps improve your credit score.

Is $80,000 in student loans bad? ›

The average student loan debt owed per borrower is $28,950, so $80K is a larger-than-average sum. However, paying off your balance is possible. Since payments on an $80,000 balance can be high, extending the repayment term to lower monthly payments may be tempting.

What is the average age people pay off student loans? ›

A 2019 study from New York Life found that the average age when people finally pay off their student loans for good is 45.

How to pay off $60,000 in debt in 2 years? ›

Here are seven tips that can help:
  1. Figure out your budget.
  2. Reduce your spending.
  3. Stop using your credit cards.
  4. Look for extra income and cash.
  5. Find a payoff method you'll stick with.
  6. Look into debt consolidation.
  7. Know when to call it quits.
Feb 9, 2023

How to pay off $30,000 in student loans fast? ›

Here are seven strategies to help you pay off student loans even faster.
  1. Make extra payments toward the principal.
  2. Refinance if you have good credit and a steady job.
  3. Enroll in autopay.
  4. Make biweekly payments.
  5. Pay off capitalized interest.
  6. Stick to the standard repayment plan.
  7. Use 'found' money.
Jun 21, 2024

Is 200k a lot in student loans? ›

Your monthly payment is likely high if you have $200,000 or more in student loans, making the idea of extra payments seem near impossible. However, paying extra might help get you out of debt significantly faster.

How long it takes an average graduate to repay $100000 in student loans? ›

While the standard repayment term for federal loans is 10 years, it takes anywhere between 13 and 20 years on average to repay $100k in student loans. Here are some different scenarios to consider, depending on your financial situation and goals.

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