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.
Interested in refinancing student loans?Here are the top 6 lenders of 2018!
|Lender||Variable APR||Eligible Degrees|
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1 Important Disclosures for Earnest.
To qualify, you must be a U.S. citizen or possess a 10-year (non-conditional) Permanent Resident Card, reside in a state Earnest lends in, and satisfy our minimum eligibility criteria. You may find more information on loan eligibility here: https://www.earnest.com/eligibility. Not all applicants will be approved for a loan, and not all applicants will qualify for the lowest rate. Approval and interest rate depend on the review of a complete application.
Earnest fixed rate loan rates range from 3.89% APR (with Auto Pay) to 6.97% APR (with Auto Pay). Variable rate loan rates range from 2.47% APR (with Auto Pay) to 6.30% APR (with Auto Pay). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 8.95% for loan terms 10 years or less. For loan terms of 10 years to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95% (the maximum rates for these loans). Earnest variable interest rate loans are based on a publicly available index, the one month London Interbank Offered Rate (LIBOR). Your rate will be calculated each month by adding a margin between 1.82% and 5.50% to the one month LIBOR. The rate will not increase more than once per month. Earnest rate ranges are current as of Month/Day/Year, and are subject to change based on market conditions and borrower eligibility.
Auto Pay discount: If you make monthly principal and interest payments by an automatic, monthly deduction from a savings or checking account, your rate will be reduced by one quarter of one percent (0.25%) for so long as you continue to make automatic, electronic monthly payments. This benefit is suspended during periods of deferment and forbearance.
The information provided on this page is updated as of 08/21/18. Earnest reserves the right to change, pause, or terminate product offerings at any time without notice. Earnest loans are originated by Earnest Operations LLC. California Finance Lender License 6054788. NMLS # 1204917. Earnest Operations LLC is located at 302 2nd Street, Suite 401N, San Francisco, CA 94107. Terms and Conditions apply. Visit https://www.earnest.com/terms-of-service, email us at email@example.com, or call 888-601-2801 for more information on ourstudent loan refinance product.
© 2018 Earnest LLC. All rights reserved. Earnest LLC and its subsidiaries, including Earnest Operations LLC, are not sponsored by or agencies of the United States of America.
2 Important Disclosures for Laurel Road.
Laurel Road Disclosures
APR stands for “Annual Percentage Rate.” Rates listed include a 0.25% EFT discount, for automatic payments made from a checking or savings account. Interest rates as of 11/8/2018. Rates subject to change.
Variable rate options consist of a range from 3.27% per year to 6.09% per year for a 5-year term, 4.64% per year to 6.14% per year for a 7-year term, 4.69% per year to 6.19% per year for a 10-year term, 4.94% per year to 6.44% per year for a 15-year term, or 5.19% per year to 6.69% per year for a 20-year term, with no origination fees. APR is subject to increase after consummation. The variable interest rate will change on the first day of every month (“Change Date”) if the Current Index changes. The variable interest rates are based on a Current Index, which is the 1-month London Interbank Offered Rate (LIBOR) (currency in US dollars), as published on The Wall Street Journal’s website. The variable interest rates and Annual Percentage Rate (APR) will increase or decrease when the 1-month LIBOR index changes. The variable interest rates are calculated by adding a margin ranging from 0.98% to 3.80% for the 5-year term loan, 2.35% to 3.85% for the 7-year term loan, 2.40% to 3.90% for the 10-year term loan, 2.65% to 4.15% for the 15-year term loan, and 2.90% to 4.40% for the 20-year term loan, respectively, to the 1-month LIBOR index published on the 25th day of each month immediately preceding each “Change Date,” as defined above, rounded to two decimal places, with no origination fees. If the 25th day of the month is not a business day or is a US federal holiday, the reference date will be the most recent date preceding the 25th day of the month that is a business day. The monthly payment for a sample $10,000 loan at a range of 3.27% per year to 6.09% per year for a 5-year term would be from $180.89 to $193.75. The monthly payment for a sample $10,000 loan at a range of 4.64% per year to 6.14% per year for a 7-year term would be from $139.65 to $146.76. The monthly payment for a sample $10,000 loan at a range of 4.69% per year to 6.19% per year for a 10-year term would be from $104.56 to $111.98. The monthly payment for a sample $10,000 loan at a range of 4.94% per year to 6.44% per year for a 15-year term would be from $78.77 to $86.78. The monthly payment for a sample $10,000 loan at a range of 5.19% per year to 6.69% per year for a 20-year term would be from $67.05 to $75.68.
However, if the borrower chooses to make monthly payments automatically by electronic funds transfer (EFT) from a bank account, the variable rate will decrease by 0.25%, and will increase back up to the regular variable interest rate described in the preceding paragraph if the borrower stops making (or we stop accepting) monthly payments automatically by EFT from the designated borrower’s bank account.
3 Important Disclosures for SoFi.
4 Important Disclosures for LendKey.
Refinancing via LendKey.com is only available for applicants with qualified private education loans from an eligible institution. Loans that were used for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not eligible for refinancing with a lender via LendKey.com. If you currently have any of these exam preparation loans, you should not include them in an application to refinance your student loans on this website. Applicants must be either U.S. citizens or Permanent Residents in an eligible state to qualify for a loan. Certain membership requirements (including the opening of a share account and any applicable association fees in connection with membership) may apply in the event that an applicant wishes to accept a loan offer from a credit union lender. Lenders participating on LendKey.com reserve the right to modify or discontinue the products, terms, and benefits offered on this website at any time without notice. LendKey Technologies, Inc. is not affiliated with, nor does it endorse, any educational institution.
5 Important Disclosures for CommonBond.
Offered terms are subject to change. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900). If you are approved for a loan, the interest rate offered will depend on your credit profile, your application, the loan term selected and will be within the ranges of rates shown.
All Annual Percentage Rates (APRs) displayed assume borrowers enroll in auto pay and account for the 0.25% reduction in interest rate. All variable rates are based on a 1-month LIBOR assumption of 2.28% effective October 10, 2018.
6 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
|2.47% – 6.99%3||Undergrad & Graduate|
|2.47% – 6.30%1||Undergrad & Graduate|
|2.51% – 8.09%4||Undergrad & Graduate|
|3.02% – 6.44%2||Undergrad & Graduate|
|2.69% – 7.21%5||Undergrad & Graduate|
|2.79% – 8.39%6||Undergrad & Graduate|