Strategies to Eliminate $50,000 in Student Loan Debt Within 5 Years
More than 43 million Americans have federal student loan debt, totaling $1.727 trillion according to the Education Data Initiative. On average, each borrower owes $37,088 in federal loans, and when including private loans, the average debt rises to about $39,981.
Currently, the typical undergraduate borrows $32,637 to earn a bachelor’s degree at a public university. If you attend a more expensive school or study longer, your debt could be significantly higher.
Dealing with thousands of dollars in student loan debt can be overwhelming. However, financial experts offer several strategies to manage and pay off $50,000 in student loan debt within five years.
**Pay Off the Loan With the Highest Interest First**
Focus on paying off the loan with the highest interest rate first, a strategy known as the “debt avalanche” method. Make minimum payments on all other loans, but pay as much extra as possible on the highest interest loan until it’s paid off. Then, move to the next highest interest loan. This approach saves money on interest costs.
**Check If Your Loan Has Been Forgiven**
In the past four years, $146 billion in student loan debt has been forgiven for 4 million Americans. Check if your loan is part of these forgiveness plans or could be in the future. Meanwhile, prioritize paying down high-interest private loans and stay updated on federal loan forgiveness programs.
**Temporarily Pause Retirement Savings**
If you have significant student loan debt, consider redirecting your retirement savings towards debt repayment. Although you might miss out on a company match, paying off high-interest student loans can be more beneficial in the long run. Once debt-free, you can accelerate your retirement savings.
**Pick Up a Side Hustle**
If your current job doesn’t allow for significant debt payments, consider a side job. Opportunities like driving for Uber, freelancing on platforms like Fiverr and Upwork, or starting a small business can provide additional income. For instance, driving for Uber can earn you about $19 an hour. Working 20 hours a week could bring in an extra $380 weekly, or nearly $20,000 annually, helping you pay off $50,000 in student debt in less than five years.