Learning on Borrowed Time: How to Reduce College Debt

Ah, college: the illuminating discussions in light filled classrooms, the golden elixir of cheap beer flowing from battered kegs. These are the memories that are recorded in embarrassing Facebook photos, remembered during five-year reunions. For many graduates, there is another vestige of college days: student loans. As much as you want to forget these along with that 20 lb biochemistry textbook, you can’t sell back your loans.

To add “loan free” to your post-college life, here are some ways to lighten your loan load, quickly and efficiently:

1. Know Your Loans

Many students come out of college with a lingering case of mono and federal loans. More than 90% of student loans are federal, with other money coming from private institutions, like a bank or other financial institution (some benefit from grandparents that are financial institutions in their own right. Lucky bastards). If you are one of the scores of students getting money from Uncle Sam, you have eight federal repayment plans to choose from. Many feature varying payment plans based on factors like income, while the standard model features the same repayment amount for the duration of the loan. See http://time.com/money/4173592/federal-student-loan-repayment-options-chart/ for a comprehensive breakdown of your choices.

2. Find Out if Refinancing is Right For you

Let’s break it down: refinance – to finance again. Although looking for new loans might sound as crazy as your one roommate’s obsession with Che Guevara, refinancing can be a good option to achieve lower interest rates. Essentially, one looks for private institutions to take out new loans so they can pay off the original loan, typically paying a lower rate of interest than the original plan. The hope is that upon graduation, degree in hand, students will earn enough money to qualify for lower interest rates. Here’s where many who refinance get into trouble—if your out of college job as a dog washer, barista, or caterer (hey, who found my CV!), keeps you cash strapped, you likely won’t qualify for lower interest rates. Debtors who turn to private financing could also lose some safety nets of government loans. People who are steadily making decent money could benefit from private refinancing, and can find out through a bit of research.

3. Step on the Gas in the Grace Period

It is a truth universally acknowledged, that a single man in possession of a government loan has at least six months before repayment begins. Jane Austen might roll over in her grave to learn that women, too, have the same 6-month window before paying their debts. Whatever gender, it’s a smart idea to start making payments, no matter how small, before interest starts accruing when the 6-month mark arrives.

4. Autopay Your Way to Freedom

Nowadays, bills come in all shapes and sizes. From rent to Netflix subscriptions, monthly bills for all things necessary and nonessential can add up. One way to avoid feeling the monthly bill burn so strongly is to set up autopay accounts when you can. (You’ll have to check with your local Chipotle for their billing options). Most utility companies, phone services, gyms and a whole lot of others offer autopay plans. Your account will be deducted monthly whether you are brave enough to look or not. Avoid late fees and heartburn with auto pay. Unless it’s from your fifth taco--that’s on you.

5. Live Like You Owe Something

Don’t ignore your debt—instead, acknowledge it as that necessary, ugly monster under your bed. Living in line with your debt could go different ways: some return to the nest, living rent-free with their parents or another kind relative (always pick up after yourself and make a few meals for the family), others adapt social activities to free or cheap options, while some take on an extra job, like participating in a mock jury or delivering pizza. By living more frugally while in debt, you’ll be able to climb out into that lavish lifestyle sooner.

There’s also dumpster diving, but that’s a subject for another article. Good luck!