As if the years of taking an undergraduate degree weren’t challenging enough, many students-turned-professionals face another significant challenge: student loans. The mental and emotional toll of getting through years of lectures, exams, sleepless nights, and internships is already high, and for many, that’s just the beginning.
With the prices of private education surging and costs of living rising, it becomes all the more challenging to settle student loans. It becomes all the more difficult to imagine a future where you’re financially free, especially when each month brings a reminder of how much you still owe.
How does one lead themselves through it when the burden seems too heavy to bear?
Understanding the Weight of Student Debts
Over the past few decades, tuition fees have climbed at a pace that is much faster than inflation. In many countries, and especially in the U.S., private universities can cost anywhere from $30,000 to $70,000 per year. And that’s without all the other things that come with going to university: accommodation, books, food, and miscellaneous fees.
By the time students graduate, they often find themselves drowning in six-figure debt. For some students, however, they are just halfway there, particularly for those who plan to pursue graduate or professional studies.
Many students pursue law, medicine, or other master’s degrees in the hopes of securing higher-paying roles. In the process, they bury themselves in more debt. This has proven to be risky, as the payoff isn’t always immediate. Once they graduate, there is pressure to keep up with student loan payments.
What many people fail to see is that student debt can impact your entire life trajectory. Many graduates delay key milestones like getting married, buying a home, having children, or even starting a business, simply because they’re unsure how to manage their finances with such a heavy burden of student loans hanging over them.
As a result, these students experience financial stress that can manifest in several forms, including anxiety, sleep problems, and even depression.
Strategies to Tackle Student Loans
Is there a way out? The short answer is yes, it is possible. But the long answer is that it takes patience, a clear plan, and sometimes, a shift in your mindset.
Student debt is obviously something you cannot eliminate overnight, but it can be managed and eventually paid off through a combination of practical financial steps and lifestyle adjustments.
Here are some of the most effective strategies that borrowers have used to get ahead:
- Know What You Owe
Before you can fix the problem, you need to understand it. Make a full inventory of your student loans, including the total amount owed, the interest rate for each loan, the minimum monthly payments needed, and more.
Building a successful repayment strategy is practically impossible if you just guess the numbers. Try to stay as accurate as possible, as getting organized will be your first real move toward controlling your finances.
- Focus on High-Interest Loans First
Now that you’ve broken down your loans, you might already see which one has the highest interest rate. That’s the one you have to prioritize. The method is called the avalanche method, where you direct any extra money toward the loan with the highest interest rate while making minimum payments on the rest. This minimizes the total interest paid over time.
You can also try an alternative approach called the snowball method, wherein you pay off the smallest balance first. For some, that might give you that psychological win that can help build momentum.
- Explore Income-Driven Repayment (IDR) Options
If you’re working a lower-paying job or have a fluctuating income, Income-Driven Repayment plans can help. These plans cap your monthly payments at a percentage of your income and extend your loan term up to 20 or 25 years. There are services that help borrowers identify which IDR plan best fits their situation, especially for those with federal student loans.
Under certain IDR plans, your remaining loan balance could be forgiven after you’ve made consistent payments for the required period. It’s not immediate relief, but it provides breathing room and can keep you financially afloat.
- Live Below Your Means
Yes, scrolling on Instagram to find that your favorite influencer is cruising in their annual European summer vacation again can give you that feeling of FOMO (fear of missing out), but if you really want to settle your student loans, you’ll have to make some sacrifices and build good financial habits.
As much as possible, your expenses should go only to your basic needs. From time to time, you can spend on your wants as well, but there must be a fine balance. For others, this might mean living with roommates for longer, skipping on luxury purchases, or saying no to an expensive dinner invitation.
Even cutting a few hundred dollars per month can help you save thousands per year! All you need to do is stay consistent, and eventually, you can buy your freedom.
Final Thoughts
It’s easy to feel trapped with the thought of student loans, but remember that debt should never define you; it is simply something you have. As long as you have a clear plan, take small but consistent actions, and the right mindset, you can take control of your financial future.