Are you having trouble keeping your head above water, because you’re drowning in student loans? Are you trying to figure out how to pay off student loans faster?
I want you to think about what your real goals are. Do you want to learn how to pay off student loans as quickly as possible? Or, are you just trying to figure out a way to pay off your debts without working three jobs? Precisely defining your goals is the first step towards financial confidence.
Debt can certainly be overwhelming, but know that you’re not alone. In fact, one in five Americans has student loan debt – that’s 45 million people, just in the United States. According to NBC, student loans are the largest source of debt in America. They amount to even more than credit card debt or car loans.
Exactly how much does the total student debt in America add up to, you ask? Well, how does 1.5 Trillion dollars sound? That’s the total amount of student loan debt in the U.S alone – not including Canada.
How To Pay Off Student Loans is a Generational Problem
Student loans have become a generational problem. While most carriers are recent college graduates, student loan debt is starting to creep into older generations who took out loans for their children or grandchildren.
Part of the problem is the initial cost of college is extremely high. According to the National Center for Education Statistics, the average annual cost of all colleges private in public including tuition, room, and board are right around $40K a year. That means a Bachelor’s degree will set you back $160K and Master’s degree $240K assuming similar figures year to year.
According to Credit.com, the average student takes on right around $30,000 in student loan debt after graduating college.
To me, this seems crazy since my high-income skills courses cost about 85 – 90% less than that amount.
When a student loan is $30,000, the average payoff time for people who earn an average salary, is somewhere between 1-3 decades. This leaves many people unable to properly prepare for retirement. So many of us don’t know how to pay off student loans, yet it greatly affects us.
You may be thinking to yourself, But aren’t my student loans “good debt”? Many people see student loans as a future investment necessary to get their desired careers. While this may be true for some, many people end up working jobs that have nothing to do with their selected majors.
In other words, they didn’t actually need that degree to do their current job.
Even if your loans were necessary for your career path, understand that no debt is good debt. Realistically speaking, most graduates still have to pay off their education during their careers for at least a couple of years, which can lead you to wonder if the initial investment was worth it at all.
I’m going to tell you how student loans impact your life, why many of the strategies people use to pay them off fail, and how you can repay your student loans faster and achieve financial confidence.
Consequences of Having Student Debt: Why You Should Be Motivated to Pay Off Student Loans
As it turns out, student debt is much more debilitating than our society likes to admit. Here are a few consequences that go hand-in-hand with unpaid debts.
1. Debt Affects Your Credit Score
Having student debt will affect your credit score in one way or another. Should you be able to make all of your payments consistently on time, student loans can ironically help you build up your damaged credit.
However, if this were the case for most Americans, we wouldn’t have the catastrophic debt problems that we do today.
As soon as a student loan payment is more than 90 days overdue, you’re considered “delinquent” in the eyes of major credit bureaus. Your credit score will start a downward spiral, making it more difficult for you to apply for housing and future financial assets.
2. Takes a Toll on Your Mental Health
Your student loans can also greatly affect your mental health. According to the APA, 64% of students report that the fear of student loans prevents them from performing at their optimum level— And that’s just for current students.
A study conducted by the University of Nottingham found that people with student loan debt are more than twice as likely to experience a level of depression or anxiety.
3. Causes Problems in Personal Relationships
Since debt causes depression, anxiety and irritability, it can also affect your personal relationships. Student debt can affect your relationships for other reasons, too, as struggling financially causes problems in relationships.
According to CNBC, about 13% or 1 in 8 divorced couples cite student loans specifically for being a major factor for ending their relationships.
4. Affects Future Job Prospects and Income Prospects
Your credit score plays into your future job security. Every time a background check is run on your credit, a potential employer has the ability to see your debt-to-income ratio.
While this may not always be a deciding factor, it can certainly limit your opportunities with today’s competitive market.
Certain employers won’t hire you if they think you’re susceptible to bribes, due to a high debt-to-income ratio and a poor financial situation.
Why are Student Loans So Difficult to Pay Off?
Before springing into action, you have to understand why loans are systematically difficult to pay off. Here are a few of the many reasons why we have a huge student debt crisis.
1. Payments are High
According to the Federal Reserve, the average student loan payment is between $200-300 a month. This amount can be extremely difficult to consistently pay on time, regardless of your income level.
It’s no wonder than more than 10% of borrowers default on their loans within two to three years. Defaulting on debts negatively affects your credit score, making financial freedom even more distant
2. Debt isn’t Openly Discussed
One of the biggest problems is that no one discusses how to pay off student loans. I’m sure you’ve asked yourself how people can pay off their loans so effortlessly, and you’re not alone. 1 in 5 Americans (approximately 45 million Americans) have student loan debt, yet many of us still struggle to methodically improve our financial situation.
For example, most people are unaware that the government provides catered income-based payment plans for those who can’t afford their payments.
Less than 20% of student loan holders use these plans, though that number is steadily on the rise out of vital necessity.
3. You Can’t Declare Bankruptcy on Student Loans
Unlike other loan types, student loans do not go away, even if you declare bankruptcy. It’s possible that you’ll be “forgiven” some of these debts (we’ll explain this later), but even then, going bankrupt is not an ideal situation, to say the least.
4. Stacking Interest Rates
Contrary to popular belief, student loans do not have lower interest rates. Student debt racks up just as quickly as any other loan. With so much misinformation, it makes sense that learning how to pay off student loans can be so difficult. This is why it’s in your best interest to pay off your debts as soon as possible.
What is Student Loan Forgiveness?
You may have heard of student loan forgiveness, but what exactly does that mean? After all, student loans don’t disappear even after declaring bankruptcy, so how could this program be useful?
As it turns out, student loan forgiveness refers to a type of assistance program that helps you pay off your debt, or eliminates large portions completely.
The program is predicated on your income, job security, and general financial situation. Therefore, you shouldn’t depend on the program for taking care of your debt. Rather, if you find yourself eligible in the future, use it as a helpful tool for paying off your debt. Preparing for the worst-case scenario can help you learn how to pay off student loans, but it should be a low-priority backup plan.
Student loan forgiveness can refer to the discounted payment plans set by the government for eligible candidates. There are a couple of loan payment options available, so make sure you research the best one for your situation.
One of the most popular options allows you to pay off your student loans within ten years as long as you’re making regular, qualifying payments. Though a decade may seem like a long time, it is a lot shorter than the time most people spend paying off their debt.
Note that most people don’t get approved for student loan forgiveness. Don’t get your hopes up.
Keep in mind, the quicker you start paying off your student loans, the better off you’ll be in retirement. Debt repayments by nature detract from vital retirement savings opportunities.
Student Loans Are Not “Good Debt”
Let’s circle back to the age-old myth that student loans are “good debt”. While consistently making payments to any loan can help repair an already damaged credit score, there is no such thing as good debt. Borrowing from your future self is never a good idea. Your future self needs that money.
To put it plainly, the easiest way to achieve financial confidence is to avoid debt altogether. If you can’t do that, paying off your debt as soon as possible is the next best option.
While student loans might be more easily forgiven in the eyes of employers or potential housing opportunities, they are certainly not preferred. Just because something is widespread and unfortunately somewhat universal in the U.S, doesn’t mean it’s acceptable.
Understand that although you’re not alone, you need to get rid of any and all debt as soon as possible. Financial confidence starts when you begin to be realistic about how you manage your money. Learning how to pay off student loans requires a level of self-awareness. Debt is not good, and it never will be.
Debt is never purely beneficial. The fact that people call student debt “Good debt” normalizes it and detracts from the very real damages that come along with student loans.
Can Student Loans Be Paid Off by Budgeting?
If you are like most people with student loans, you’ve probably spent timeless hours googling “how to pay off student loans”. There’s no shortage of advice out there on how to save money, but is that enough to counteract student debt?
Everyone has certain fixed costs, such as your rent or mortgage or car insurance. Most financial advice focuses on reducing variable expenses. These are the things that are more wants than needs such as vacations, clothing, and entertainment.
The “wants” area is where you can really reduce your spending and direct more of your income towards debt repayment. However, this requires a lot of self-discipline and can be difficult to stick to especially if you’re in a social environment.
Ultimately, it’s unlikely reducing your variable expenses is going to consistently bring in the extra $300 a month you need to pay off your debt. This is certainly one piece of the puzzle, but not all of it.
Budgeting is a great way to pay off your student loans slowly. There’s nothing quick about this method.
Instead, time would be better spent figuring out how to take on a side hustle. You’re better off developing a high-income skill that allows you to get high-paid freelance work on the side.
How Do You Develop a High-Income Skill and Lucrative Side Hustle?
With the rise of the education bubble, paying off your student loans using budgeting alone can be extremely slow and difficult. Not to mention, it can cause you to make drastic lifestyle changes, which can be a rude wake-up call to your entire system.
In other words, budgeting can really make you hate your life.
Instead, why don’t you figure out a way to develop a side hustle or pursue some sort of freelance work that is high-paid? To do this, you’ll need to assess your current skill set and potentially develop some new skills.
We’ll go over a couple of easy ways to make money on the side that don’t require a huge learning curve later in this article.
Remember that developing a high-income side hustle can take time, so the sooner you start, the better. Exercise networking regularly by asking friends and family if they know anyone who has a side gig or works as a freelancer.
Or, find a mentor who can teach you a high-income skill.
Not only will talking to others help guide you towards a lucrative gig, but you’ll also build confidence seeing that such paths are more than obtainable. Ask your freelancing peers how to repay student loans efficiently. The more advice, the better.
Smart Ways to Make More Money on the Side
Ready to get started? Here are three ways to make money on the side without having to bend over backwards. With a little effort and consistency, you’ll be paying off your student loans in no time at all.
1. Try Your Hand at Copywriting
Copywriting is a very lucrative skill, and luckily, anyone can learn it quite quickly with the right mentor. Plus, many of these lucrative copywriting gigs are remote, meaning you can work on these jobs from anywhere, getting paid well to write persuasive copy.
2. Discover Your Niche Skill
Do you have any specialized skills? Generally speaking, the more niche your area of expertise can get, the higher your potential payout can be. For example, if you’re great at repairing computers, seek out local repair jobs in your area. If you’re great at sales or writing, try copywriting. Not sure what high-income skill you’re best-suited for? Take my free High-Income Skills Quiz.
3. Offer Consultation Services
Are you already an expert in a certain field? A number of companies will offer very lucrative earnings to independent consultants who produce bonafide results. Take advantage of your knowledge and monetize it whenever possible.
If you believe in yourself, you can do it learn how to pay off student loans with side hustles. Becoming a successful freelancer requires a positive mindset, clear goal setting, and unmatched determination. If you’re willing to take the jump, you’ll see eliminating student loans isn’t as difficult as you may have thought.
Eliminate Your Student Debt Completely
It goes without saying that eliminating your student debt should be at the top of your priority list. Not only do loans rack up quickly and affect you negatively financially, but they can also take a deep toll on your personal life.
Budgeting is not the miracle solution. The best way to achieve financial confidence in the thriving gig economy is to develop monetizable skills. Sought-after skills that are in demand such as copywriting will allow you to advance on your own time and pay off your loans in proportion to your work ethic.
At the end of the day, no debt is good debt. Learning how to pay off student loans isn’t easy, but it is necessary. Take the first step towards financial confidence by taking control and full responsibility for your financial situation.
Develop the High-Income Skill of Copywriting
If you’re ready to start making real money, to pay off your student loans as fast as possible, then you’re ready to learn the lucrative skill of copywriting. The best way to learn this skill is to enroll in my High-Income Copywriter Certification Program. You will learn one of the most lucrative and most sought-after skills that today’s business owners are hiring freelancers for. For anyone wondering how to pay off student loans faster, learning this skill is how.