Did you know that student loan debt in the United States has topped over $1.5 trillion? Currently, student loan debt is the second-largest type of consumer debt. In fact, mortgages take the lead. However, we’ll list 5 ways that students can lower student loan debt out of college.
Indeed, after high school, choosing the right college becomes the top priority. Unfortunately, it’s easy for students take student loans. Even when they don’t understand the consequences.
Additionally, many recent graduates can go for years without a job. Afterward, graduates can have high student debt loans.
It’s true, high student debt loans can negatively impact credit scores. In fact, low credit scores can make it challenging to get ahead in life.
Unfortunately, this is true even after graduated find rewarding careers. Many are left with various new challenges. These include:
- Big debt-to-income ratios
- Steep interest rates
- Overpriced rates to rent homes or apartments
- The inability to purchase a home
- Difficulty buying a vehicle
The 5 ways to that students can lower student loan debt out of college are:
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Control spending
Of course, it’s easy to get carried away in college and out. However, hefty purchases are not appropriate. Especially when many graduates are struggling financially.
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Make payments on time
Additionally, payment history has the highest impact on credit scores. Indeed, it’s crucial to pay bills on time to avoid extra fees, charges, and higher rates. Also, paying bills on time can help ensure better future credit.
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Refinance student loans
Also, refinancing a student loan can help decrease interest rates. Fortunately, factors like increased income and financial stability can help lower interest rates.
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Consolidate loans
Fortunately, graduates with a variety of student loans can evaluate consolidating them into one loan with a fixed rate. Similarly to refinancing, loan consolidation can help ensure better rates.
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Consider relocating
Also, graduates that live in an area with a higher cost of living may want to evaluate moving. They can move somewhere where it’s easier to live. At the same time, they can successfully pay off student debts. Fortunately, BestPlaces has a cost-of-living comparison calculator. Also, some states allow graduates to save thousands by avoiding income taxes. Currently, there are nine states in the US without state income taxes.
Key Takeaways
So, how can we solve the student loan crisis? Of course, there are many reasons why the United States is facing this crisis. These include childhood education, lending decisions, cost of tuition, mental health, and more. Â There is one answer that graduates can control. That is, by tackling them head-on. Indeed, before entering into any loan, it’s vital to measure personal debt-to-income spending. Additionally, it’s crucial to evaluate the feasibility of paying it off. Of course, there are also other important factors.
Fortunately, wisely managing student loan debt can bring personal freedom. In fact, accountability followed by action is the answer to most personal student loan crises. Truly, graduates need to take a stand. This can help them to control their freedoms, financial futures, mental health, and life paths. Fortunately, it all begins with the decision to make a change.
Additionally, for more tips, read our article Using Prudent Spending to Climb the Financial Ladder.
NOTES:
*The information offered in the above post is not intended to replace the advice of a financial consultant/financial planner. WorkPlaceCredit® disclaims any responsibility towards an individual’s personal finances. We offer these posts only as conversation starters in the field of financial literacy.
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