Create a 3- to 5-year plan
Clayton Shearer, a wealth manager at A&I Financial Services in Englewood, Colorado, urges clients to create a 3- to 5-year plan to pare college debt. Knowing exactly when the loan ends is comforting for many clients. Clients "have a goal in place, they're committed to it and they know exactly what to pay monthly," Shearer says. Paying it becomes part of their monthly routine comparable to submitting checks for mortgages, cable TV and telephone.
For example, 2 clients had $50,000 combined in college debt and were making around $100,000 a year jointly. To pay it off, they established a budget and cut back on spending. Their budget was helped by 2 sizable bonuses from work, resulting in their sending $800 per month for 2 years to cancel their college debt. Had they not prepaid, it would have taken about 15 years to pay off the loan. The result, Shearer says, is clients "get debt-free and have a load lifted off their shoulder."