An estimated 43.5 million Americans owe money in student loan form. And the average monthly payment among borrowers is $337.
Now that may not seem like so much money. But actually, the average student loan balance is a whopping $37,338, and that’s just for federal borrowers. The reason the average monthly payment is only $337 is that it commonly takes borrowers with federal student loans at least 10 years to knock out their student debt.
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But what if you’d rather shed your student loan debt much sooner? The good news is that with the right strategy, you might manage to be debt-free by 2030, even if you owe somewhere in the ballpark of $37,338. Here’s how to pull that off.
Don’t get on an income-driven or extended repayment plan
One of the perks of taking out federal student loans for college, as opposed to private loans, is that you’re eligible to apply for different repayment plans that can shrink your monthly payments on an individual basis. These include income-driven repayment plans, where your payments are calculated as a small percentage of your earnings, or extended repayment plans.
Getting onto one of these plans can be tempting. But you should know that signing up for one of these plans could also mean that it takes a really long time to be debt-free. So if your goal is to pay off your loans by 2030, stick to the standard repayment plan for federal borrowers, which is 10 years long, and do your best to accelerate your loan payoff date.
Make larger payments than what you have due
If you want to be student debt-free in seven years from now, you’ll need to put more money into your loan payments, either regularly or as sporadic lump sums. You may find it easier to do the former and just work higher payments into your monthly budget. That could mean paying $50 more per month for now and increasing that sum as your income rises.
But to be clear, when a windfall comes your way, it’s never a bad thing to use it to pay down a chunk of your student debt in one fell swoop. If you receive a $2,000 tax refund, for example, that you don’t have another specific use for, paying down $2,000 of your loan’s principal could go a long way toward getting you to be debt-free sooner.
Finally, you may want to consider boosting your income with some gig work. The extra money could make it possible to make larger loan payments month after months so you’re debt-free ahead of schedule.
Paying off a large pile of student loans isn’t easy. But the sooner you do it, the less money you end up spending on interest — and the sooner you can function without the weight of that debt dragging you down. So if you’re eager to be rid of your student loans by 2030, follow these tips — whether you owe something in the vicinity of $37,338, more, or less.
