There’s a storm coming to the United States. Actually, there are several storms, including a more than $1 trillion behemoth of student loan debt that has been inflicted upon the country’s youth and taxpayers. Canada is also facing a student loan debt tidal wave of more $10 billion.
Unfortunately for both the students and taxpayers, there isn’t any respite in sight as the student debt continues to be piled on, and it is inevitable that interest rates will rise – the United States Congress has frozen student loan rates for one year.
How can the 18-29 demographic pay off student loans, especially when the unemployment rate is at 8.1 percent in the United States (9.3 percent for unemployed youth) and 7.3 percent in Canada (12.7 percent for unemployed youth)?
There are a variety of things a student can do to avoid being stuck in the trenches of debt. Here are some tips to paying off your college debt.
No. 1 priority
Student loan debt should be the number one priority for any graduate. For graduates, it’s absolutely crucial to pay off the thousands of dollars as quickly as one can to avoid the penalties and added interest. Whatever extra cash is left at the end of the month after the rent is paid should be put towards the debt.
Straight to the debt
Any income that is generated should be put towards the student loan debt. Whether it is employment income, an allowance from parents, benefit payments, tax returns, and whatever else, it should be applied right to the debt.
Budgets should be established and implemented by everyone. This ensures the person knows how much he or she will generate in income and how much of that money goes towards bills. Set up a budget that prioritizes the student loan debt. For example, if the income is $1,000 per month, rent is $500 per month and the necessary bills are $250, then the remaining monies will be put towards the student loan debt.
If one full-time job isn’t enough to pay month-to-month bills as well as the student loans, then a part-time job should be considered. That supplemental income should only be used for student loan debt and nothing else.
No, this doesn’t mean skipping the country or faking one’s own death, but rather signing up for the various programs that forgive student loans. For one year of volunteering at Americorps, students can receive nearly $5,000 for paying off college debt and a stipend of more than $7,000. Signing up for military service can garner up to $20,000, and even more if the service is in a hostile environment.