The summer following college graduation is often the last summer of freedom before you enter the working world. And let’s face it — once you start working full-time, those lazy and carefree days without worrying about how to reduce student loan debt will be hard to come by.
Even better, if you took out federal student loans to pay for college, you likely have a six-month grace period before those payments become due. This gives you time to adjust your budget and prepare for the new expense. Nice, right?
But you shouldn’t squander such a gift. Payments made during the grace period can drastically reduce the time it takes to pay off your balance and money spent on interest over time. Plus, depending on the loan, your balance may still be accruing interest during this grace period.
Consider reducing student loan debt early
Just because your loan provider doesn’t require you to make payments during the six-month grace period doesn’t mean you can’t.
By earning a few extra dollars over the summer and putting it toward your student loan debt, you can make a significant impact on the amount you owe.
Let’s say you have $30,000 in student loans at 6% interest. Make just one extra payment of $500 dollars this summer and you cut $1,120 in interest from the lifetime cost of your loan.
If you really want to get serious about putting extra payments towards your student loans, contribute $1,500 dollars before payments become due and reduce the time it takes to pay off your debt by two years — plus earn $3,188.29 in interest savings. Pretty impressive for a few months of summer work, right?
Many people view summer as the time to relax and indulge rather than hustle for extra cash. So how do you balance post-graduation summer fun with reducing your student loan debt?
How to reduce student loan debt
1. House-sit or pet-sit
It’s a given that people go on vacation in the summer, which provides a wonderful opportunity to make extra cash through house-sitting and pet-sitting.
New apps such as Rover.com and Mind My House can help you find clients in your area. Use the extra money to make student loan payments. Or, set aside the money in a savings account and make one large payment with your earnings at the end of the season.
2. Make money online
The internet makes it easy to start a side business and earn extra income. Use the summer to develop a great money-making side hustle you can take with you in the next phase of your life.
Examples include starting a blog, building an online business, or designing a digital product to sell. All of the extra cash you can earn from a side hustle can be put to great use on your student loans, both during the summer and long after.
3. Go on a spending freeze
Even though it’s tempting to overspend on vacations, concerts, and outings while the weather is nice and warm, summer is also a perfect time to go on a spending freeze.
With all of the free fun available in the summer season like going to public parks or pools, visiting the library to escape the heat, or enjoying nights in at your home, it’s easy to lower your entertainment budget in the summer. This is one of the easier routes when it comes to learning how to reduce student loan debt and allocating those extra funds to your student loan payments.
4. Sign up for auto pay
It’s easy when you’re first learning how to pay bills to forget one or two in all of the chaos of a new life and work routine. Just don’t forget about your student loans!
Use the summer to go ahead and set up your loan on auto pay once the grace period is over. Bonus points for making auto payments before the grace period is up!
5. Host a Yard Sale
Some of what you accumulated in college won’t make the transition into adulthood, and summer is the perfect time to sell your belongings for extra cash.
Best of all, you no longer have to have a traditional yard sale to get rid of unwanted items. You can try Amazon, Ebay, Craigslist, Poshmark (for gently used clothing), or the LetGo app and sell these items to people in your area directly through your smart phone.
Make this summer count
Summer typically means vacations and a time for relaxation. But as you can see, you can also take the time to learn how to reduce student loan debt, if you’re willing to hustle.
You can have both a great, relaxing summer and be smart about making extra money to reduce your student loan debt. You just have to take advantage of what the season offers.
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