You may have noticed in the thick of the 2016 presidential primaries that one of the major talking points for some of the candidates (primarily on the Democrat side) has been how to tackle student debt. Indeed, one of the major ideas driving the surprisingly strong Bernie Sanders campaign has been his desire to make college tuition- and debt-free. It’s an idea that plenty have poked holes in as unrealistic and idealistic, but it’s nevertheless an exciting proposal for many others.
Whether or not you support Bernie Sanders, however, the underlying need to address college graduate debt is difficult to deny. Going by just the class of 2015 that graduated last spring, we know that over 70% of U.S. college graduates are finishing up school with tuition debt, owing more than $35,000 on average. That’s an incredible burden for the bulk of our educated young adults to be graduating with, and it certainly doesn’t send them into the workforce with much momentum or excitement.
Solving the problem of tuition debt is going to take a lot of time and a lot of political maneuvering no matter who next occupies the White House. But in the meantime, college graduates would do well to take some time and learn about the most effective strategies for relieving themselves of debt as efficiently as possible. For a lot of people in this category, it’s the first step toward both financial freedom and professional success.
None of the following strategies is a flawless answer to how to deal with debt. But each is a proven method that may be of great use to you depending on your particular situation.
Most young professionals just starting out in the working world probably won’t be spending a whole lot of money they don’t need to spend anyway. But you’d be surprised how quickly unnecessary purchases can add up. So if you’re curious about this method and looking for new ways to attack your debt, try structuring a wants and needs list and restricting your spending for a given period of time to only the needs. It probably means a month of cutting out treats, entertainment, travel, etc. and putting that money instead toward paying off debts.
This may sound pretty overwhelming. Then again, college graduates are used to working long hours and taking on multiple challenges at the same time. With this in mind, some graduates looking to manage debts ultimately prefer looking for ways to make a little bit of extra money, rather than finding ways to cut costs. It could be anything from working in a coffee shop on weekends to doing some freelance writing or web design. Whatever the case, securing a side income stream and directing it straight toward your debt can be pretty effective, so long as you’re up for the work.
This is more of a payment method than a savings strategy, but it can be very helpful. Basically, when you sign up for auto-debit, you can set it up so that your monthly loan payments are automatically transferred from your checking account to the lender. This saves you a great deal of hassle and basically eliminates the possibility of missing a payment as long as you’re sure your checking account has what’s needed for each withdrawal. And beyond organizational benefits, an auto-debit setup can also come with a slight interest rate reduction from the lender.
Finally, the most straightforward tip of all is to sit down and compile all of the information relating to your debt in one place, so as to have the best possible grasp on what’s expected of you. This means figuring out what you owe and where it needs to be paid; what the interest rates are and how often you’re making payments; and, ideally, how much of your current budget you’re able to put toward those payments. It’s a little bit tedious and when you’re just starting out with a significant debt on your hands—hell, it’s even a little bit depressing—but it’s very important to start off as organized as possible. Getting all your information together in one place helps to set you off on the right foot.
You can’t eliminate debt overnight, from college tuition or anything else. But taking proven, practical steps to attack the problem in a logical manner can help it to become far less stressful than it may seem.