Five Ways to Eliminate College Loans Fast and Keep Good Credit

Students who are graduating not only get handed a shiny new diploma, but also a fresh payment schedule as well.  More than ever, students are faced with the prospect of being in debt for more than twice the time that they were in college.  And if that is not enough, there are the students who racked up big credit card debt at the same time.

What can be done to get these students out of debt as soon as possible?  Here are five ways to begin the process.

Start where you are.  You need to assess your situation in order to determine where you are and how much you owe.  Get your bills together and sit down with either a parent or a financial adviser.  Determine when you have to begin your student loan payments.  Talk about how much credit card debt you have.  In short, face the facts of where you are currently.  If you made mistakes, admit them and take steps to correct them.

Find a good job.  This might not be what you want to hear, but you have to get a job that pays pretty good money at this point.  And, it might not be in the field in which you studied or obtained your diploma – at least for a while.  The primary objective is to get a source of money flowing so that you can begin the process of paying back the money that you owe.  This might include the need to get a part-time job as well.  You need to have an “I will do what it takes” attitude in order to accomplish the objective of paying off your loans and debts.  Then, stick to your plan.  Even if you stumble, keep to your program in order to watch your debts shrink before your eyes.

Double up payments.  When you begin your college loan repayment program, you should consider making two payments per month instead of one.  With the low interest Stafford loans, your payments should be relatively affordable.  As long as you do not get yourself deeper into debt, then you should be able to make this work.  Plan for this in your budgeting process just like you would for anything else like rent, car and other monthly payments.

Avoid bankruptcy.  Your federally backed student loans cannot be wiped out by filing for bankruptcy.  The reason that this is done is so that underwriting companies will be more willing to buy these loans with the knowledge that they are backed by the U.S. Government and they have a high chance of being repaid, even if the borrower is forced to declare bankruptcy.

Live a frugal lifestyle.  The prospect of living a lavish lifestyle will not be a reality for most unless something drastic happens (like you become and instant hit as an actor/actress, model, athlete, or musician).  If you do not fall into any of those categories, you are going to have to live on less while you pay off your debts.  Consider getting a roommate and sharing expenses for several years.  Share your passion for getting out of debt and help each other live a responsible lifestyle until you are able to reach that goal.

Half of the problem is in getting started.  Once you have a plan in place and your mind made up to get this done, you are well on your way.  If you run into problems along the way, make small adjustments, but do everything in your power to stick to your plan.  And, finally, make sure that you talk to the person who might become your domestic partner about your debt issues.  Do not take these into a marriage without discussing them and deciding how to continue on your program if you do decide to marry.

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This entry was posted on Thursday, May 14th, 2009 at 5:01 am and is filed under Debt & Consolidation, Tips & Advice. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.