According to a recent financial study, the average person today owes more on his or her student loans than they currently owe on their credit cards. Because student loan debt starts so early in a person’s financial life and can last for decades, many people are starting to question whether student loans are actually worse than credit card debt.
Unfortunately, most people today are practically required to obtain a college degree in order to find a job that can support themselves and their family. With the increase in college tuition and the decrease in available scholarships, this means that taking out a student loan is the option most people have to choose to pay for school.
Unlike other types of debt, student loan debt is extremely difficult to discharge during bankruptcy proceedings. In the same way, it is also difficult to defer student loan payments or have the balance on student loan debts reduced or forgiven. In fact, many people consider student loan debts to be one of the most burdensome types of debt that they owe. Therefore, it is important that people with student loans do whatever is necessary to eliminate debt.
The best way for a former student to get their student loans paid off fast is to come up with a plan for debt reduction. A good start on this plan is to make extra payments towards the loans every month. While many people may find it hard to make the necessary cuts in spending to do this, there are a lot of advantages for a person who makes it a priority to pay off his or her student loans.
Many student loans offered by private banks have high interest rates. In fact, a typical private student loan that is issued today will have interest rates around nine percent. When this rate is compared to the average interest rate of four percent that is currently being offered on a 30-year mortgage and the similar rates on other types of loans, it becomes obvious that it makes the most financial sense to pay off student loan debt ahead of all other types of debt a person my owe. By paying off the debt quickly, a person can pay less in interest charges over their lifetime than a person who chooses to prioritize their other debt.
By simply paying a little extra money towards a person’s minimum required monthly payment, a person will be able to get out of their student loan obligations much quicker. People in this situation should consider cutting back on their spending. People who cannot cut back on anything, though, need to look at other options to get their debt paid off.