Free up Cash to Pay down Student Loan Debt
Borrowers can find money to pay their student loans by earning more money or reducing expenses (or a combination of both).
Options for increasing income include:
- Asking your employer for a raise or switching to a job with a higher salary
- Working a second job in the evenings and weekends not only yields more money to pay off the debt, but you'll have less time available to spend money. There are many options for part-time jobs, from part-time jobs to task sites to Uber and Lyft.
- If you don’t have a job, consider volunteering with AmeriCorps. The AmeriCorps education awards can be used to pay down federal student loans after graduation, not just to pay for college.
Options for reducing expenses include:
- Create a descriptive budget by tracking your spending for a month in broad categories, such as food, clothing, housing, medical care, insurance, taxes and loan payments. Increasing awareness of your spending patterns is the first step in exercising restraint.
- Substitute cheaper alternatives for current spending, such as long walks for a gym membership and brown bagging lunches instead of eating out.
- Eliminate spending on luxuries, such as cable TV, cell phone service, high-cost transportation and beverage addictions.
- Find ways of cutting the cost of necessities, such as getting a roommate to split the rent (or moving back home to live with your parents).
You also should consider selling belongings that you haven’t used in over a year on eBay to get money to pay debt. Remember, every dollar you borrow will cost about two dollars by the time you repay the debt, so selling your stuff can be worthwhile even if you have to sell it for half of what it is worth. Note that when you sell your belongings, you usually don’t have to pay taxes on the proceeds.
Although these changes might require adopting an austere lifestyle and some sacrifices, getting rid of your debt is worth it. There is a sense of freedom that comes with eliminating all debts.
When financial aid and federal student loans aren't enough to cover all college costs, consider financing the gap with private student loans. Shop around to find the loans that best fit your needs.