When you work with Millennial clients like I do, you are very well-acquainted with how student debt can affect a person’s everyday life. As countless articles and news reports lament, today’s 20 and 30-somethings are putting off buying homes and cars, getting married, having kids, and saving for retirement.
While a bachelor’s degree is generally a good investment that will earn you about $1 million more in your lifetime than a worker with a high school diploma, that fact can be hard to stomach when you make your monthly student loan payment.
With more than half of Gen Y living paycheck to paycheck, and nearly half feeling overwhelmed by their student loan burden, it’s easy to see how this is a far-reaching problem that severely limits young adults’ ability to hit typical milestones of adulthood.
But there are a few less obvious ramifications of the student debt crisis, and these affect the economy at large. I’d like to discuss those, and give you a few tips for living the life you want even if you’re paying back student loans.
Take Control of Your Career
Many Millennials graduated into a less-than-ideal job market but that doesn’t mean you can’t take your career by the reins. Believe me, no matter how imposing your student debt burden is right now, you don’t have to resign yourself to a lackluster career just to pay the bills. You can cultivate the career you want, and pay down those loans, while taking advantage of the safety net your just-for-now job provides.
Work on learning and refining new skills that set you apart from the competition. You don’t want to be average; be extraordinary. Make yourself stand out online and in person. One of my favorite tips is to create a personal website to start building your own brand as a way to showcase your skill set to potential employers.
By being proactive with your career, the most in demand millennials can increase their salaries very quickly, earn bigger bonuses, and maybe even more perks like company stock or stock options. This translates into more money to allocate towards paying off student loans quickly.
Know Your Student Loan Options
If you’re struggling to make your monthly federal loan payments, look into income-driven loan repayment options. There are programs that can help bring your payments down to a manageable rate. These are good options for people whose student loan debt is higher than their income. This will free up some breathing room to be able to build up some savings or pay off high interest credit card debt.
Educate Yourself Before Taking On More Debt
If you’re considering grad school (and the additional student loans that come with it), really think about how much value you’ll get out of that degree. Research typical salaries you’d get in that career field as well as people who are graduating from those programs.
Before you sign on the dotted line, think about other ways you can learn the same material for less. Can you learn on the job? Take a class or two instead of a full grad program? Grad school is not necessarily the fix for a bad job market. In some cases, you take on more debt, and take yourself out of the job force for several years, only to not get the career opportunities you thought you would upon graduating.
Aggressively Pay Off Your Student Loans
While some student loans have low interest rates of 3% or 4%, most student loan debt isn’t cheap. If you have student loans in the 5-8% range, you end up paying thousands of dollars in interest if you follow the 10 or 20 year repayment schedule. Why not pay off your student loans over the next few years so you never have to worry about them again?
After setting aside some money for emergencies and getting your 401(k) match, I challenge you to pay as much as you can towards your student loans. I’ve never had a client regret paying off their student loans. Eliminating your student loan debt can free you financially to be able to achieve other goals like traveling, starting a business, or scaling back on work to raise a family.