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How to get student loan debt relief

With the New Year underway, Americans are looking to make positive changes in their lives.

While making resolutions like paying down debt and saving for retirement is easy, successfully completing these goals can be a struggle. For those who want to become more financially healthy this year, here are four New Year's resolutions that will garner big results in 2016.


Student debt
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1. Treat your debt like your house is on fire.

With total outstanding consumer debt at $3.34 trillion, excluding mortgages, according to the Federal Reserve, it's clear borrowers aren't taking debt seriously enough. My method for upping the urgency: treat debt the same way you would if your house was on fire – extinguish it as soon as possible.

Debt costs you money every day. Interest charges add up and financial goals like building emergency savings, retirement investing, and more suffer as a result. I'm not saying you need to panic, but there should be a strong sense of urgency when it comes to paying off debt. You have to do more than coast along, paying the minimum.

One powerful repayment strategy I like is the "debt avalanche" method. It works like this:

  1. Order your student loans from highest interest rate to lowest interest rate.
  2. Pay the minimum on all your debt except for the one with the highest interest rate.
  3. Put anything extra you can afford towards that high-interest account.
  4. Once it's paid off, repeat the process with the second-highest rate loan, and so on.

This puts out the "fire" that is high-interest debt and helps you pay off all your loans faster. In fact, in 2015, I paid off $48,000 in student loan debt using this method.

2. Increase your income.

There's only so much budgeting, scrimping, and saving you can do, especially if you're already struggling to keep up with your bills. Rather than trying to cut out even more from your life, turn your focus to increasing income.

There are plenty of ways to earn extra money that don't require any extra education or training. Plus, many successful start-ups are making this easier than ever to achieve. Some of my favorite ways to increase income include:

  1. Become a brand ambassador, one of those friendly people who wear branded T-shirts and hand out products at events or on busy streets, which can pay $15-$25 or more per hour.
  2. Use Airbnb to rent out a room or your entire home when you're out of town.
  3. Become a TaskRabbit and earn $15-$30 per hour helping others with errands and household tasks.

3. Lower your cost of living.

Another change you can make is to cut down monthly expenses by lowering your cost of living. I don't mean giving up your daily latte – I'm talking about thinking big.

For example, consider moving to a new city, or even a different apartment to save several hundred dollars a month. For example, after years of living in New York City, I moved to Texas in order to save money on rent and other expenses -- not to mention, I no longer pay any state income tax either.

If you can't or don't want to move, there are other major living expenses you can trim as well. Instead of buying a new car, can you live with an older model while you work toward your financial goals instead? Or maybe live without a car entirely?


Before any big-ticket purchase, ask yourself: "Is this something I really need or just want?"

Keeping these living costs down frees up more money you can put towards saving for the future and becoming debt-free.

If taking on more work sounds overwhelming, start small. Even an extra $100 per month that you can put towards emergency savings, retirement contributions, or debt payments is worth it.

4. Get rid of student loan debt for good.

Of the $3.34 trillion in U.S. consumer debt, more than a third is made up of student loans. Whether you just graduated from college or have been out of school for decades, there's a good chance you're still dealing with student debt that's taking away from other important areas of your life.

Fortunately, with the student loan debt crisis getting more attention, more student loan repayment aid is becoming available.

For instance, the state of New York recently launched the new "Get on Your Feet" student loan assistance program. New York state residents earning less than $50,000 per year can have their monthly federal student loan payments covered for up to two years. It's likely other states will soon launch similar programs.


Employers are also beginning to offer student-loan assistance as well, which is becoming one of the hottest workplace perks available in 2016.

Starting in July 2016, for example, some PwC employees will be eligible to receive up to $1,200 in student loan assistance per year over the course of six years.

As the number of companies offering this perk continues to grow, seeking this benefit might prove worthwhile when changing jobs.

There are also various income-driven student loan repayment options available from the federal government, including the new REPAYE program, which can provide relief if you're struggling to make payments. Not only do these programs lower monthly payments in line with your discretionary income, but also offer forgiveness of the remaining balance after 20-25 years.

Keep in mind, however, that these payment plans extend the life of your student loans, costing you more in the long-run. Whenever possible, pay off loans quickly to save thousands of dollars in interest charges. Borrowers might also consider refinancing with a private lender in order to reduce interest rates and potentially monthly payments as well.

Whatever your ultimate goal may be – saving more money, paying off debt, or improving spending habits – making one or more of the resolutions above can help you achieve it in 2016.

Commentary by Andrew Josuweit, CEO of Student Loan Hero, a a company that combines easy-to-use tools with financial education to help millions of Americans living with student loan debt. Follow him on Twitter @josablack.

For more insight from CNBC contributors, follow @CNBCopinion on Twitter.