Here's what to do with all that student loan debt

One in six American adults – around 44 million people --  carries federal and/or private student loan debt, to the tune of around $1.757 trillion. On average, each person faces paying down a balance of $37,338. 

Those numbers have been trending up over the last two decades: In 2006 the total amount of debt nationally was closer to half a trillion and has increased every year since.

Maybe you did everything right when planning to pay for college. You followed all the best practices for saving for college, from X to Y. Still, chances are with the cost of college skyrocketing, you may have turned to federal and/or private student loans for college funding. 

Whether you are one of the many Americans who have thousands of dollars in student loan debt or you care about someone who falls in this category, this article is for you. 

Here are five well-known tactics for paying off your student loan debt quicker: 

1. Refinance: Consider refinancing your private student loans at a better interest rate than what you are currently paying. For example, consolidating debt from private loans with a low-rate student loan might help you save money on interest charges and lower your monthly payments.  

2. Make extra payments: Making extra payments on your student loans can help you pay off your debt faster. Use auto pay and make bi-weekly instead of monthly payments. Increasing the amount and occurrence of your payments even by small amounts will pay down your college debt faster. 

3. Pursue loan forgiveness programs: If you have federal loans, research loan forgiveness and repayment programs. Many states have their own student loan forgiveness plans. Many of these programs are geared toward specific industries and professions and require a commitment to work at a specific job for a required amount of time. If you have private loans, contact your lender to inquire about any options they may offer. 

4. Build your budget around paying down debt: Look for ways to cut expenses so you can put more money toward your student loan debt. For example, consider downsizing your living arrangements, reducing your transportation costs, or cutting back on entertainment expenses. Create a budget that prioritizes debt elimination by reconsidering and focusing your budget.  

5. Increase your income: Consider ways to increase your income through side gigs, freelance work, or by negotiating a raise at your current job. Then, use this extra income to make extra payments toward your student loan debt. 

We know you want to pay off your school debt so to help you even more, we compiled a few lesser-known hacks that might also help you pay down your debt faster.  

1. Use cash-back rewards: Consider using cash-back rewards from your credit card purchases toward your student loan debt. Just be sure to pay off the credit card balance in full each month so you don’t grow credit card debt. 

2. Take advantage of employer repayment programs: An increasing number of employers are now offering student loan repayment assistance programs as a benefit. How it works: Companies will match employees' monthly student loan payments up to a certain amount (subject to lifetime limits). Check with your employer to see if they offer any such programs and take advantage of them if possible.  

3. Make payments during your grace period: Many student loan types provide a six-month grace period after you graduate or leave school before you have to start making payments. Even if you're not required to make payments during your grace period, starting as soon as possible will help you pay down your debt faster. 

4. Make lump-sum payments: If you come into a windfall or “found money” like a bonus, inheritance, or a generous gift from a family member, make a lump-sum payment toward your student loan debt. It's important to remember that paying down student loan debt requires discipline and commitment. Use these tips to help you pay down your debt faster, but also be sure to budget wisely and make payments on time to avoid penalties and fees.  

You can ensure the success of your student loan repayment plan by taking baby steps, checking your progress, and rewarding yourself along the way. Forgive yourself when you have setbacks and hit reset as you regain focus on your next goal. With a little work and some help from your friends, we know financial freedom is within reach. 

As a financial wellness advocate, CAFCU offers free financial coaching to everyone! Whether you are a member or not, you can schedule a free financial coaching session with one of our certified financial wellness representatives. 

You can also learn more about CAFCU’s student loan products, services, and tools.