Here's how to pay off student debt on a salary of $40 K

Aspiring engineers, doctors and lawyers are required to receive advanced post-secondary degrees that can cost hundreds of thousands of dollars. While taking on higher student loan debt can pay off in the form of higher earnings, that isn't always the case.

A doctoral in liberal arts has the lowest potential for paying off according to a new study led by Dr. Andrew Gillen, an economist at Texas Public Policy Foundation. These graduate are tasked with paying nearly $200,000 worth of student debt on a salary of $40,000.

Dr. Gillen compiled data from the Department of Education to assess how much federal student loan debt graduates accumulated based on their field of study. Unsurprisingly, some of the biggest debt balances were among medical residents in dental fields like dentistry $138,857 medicine $179,553 and optometry $178,870. Among the other courses of study that almost guarantee a well-paid career, some other advanced degrees came with a surprisingly high price tag: Alternative medicine $230,103 dispute resolution $135,844 and liberal arts $199,115 for example.

While a college degree can open doors to more advanced fields, it's important for students to understand the implications of taking out high amounts of student loan debt. What are some examples of taking six-figure debt for a degree in a relatively low-paying field can be disastrous for graduates, Dr. Gillen said:

If you're struggling to pay off high amounts of college debt, consider refinancing of student loan repayment options like private student loan loans for a student loan. Can you compare student loan refinance rates without impacting your credit score on Credible?

The average loan amount per borrower varies depending on the type of degree they have. The average amount of debt a student takes out to earn a bachelor's degree is $23,000, compared with $144,000 for an MBA.

The overall cost of student debt depends also on the academic field. The highest cost of study is a doctoral degree in pharmaceutical sciences, leaving graduates with a total of $271,378 in Federal student loan debt. Although, this career path is more likely to pay off with a median salary of $119,806.

In contrast, a master's in accounting leaves students with $28,341 worth of student loan debt on a salary of $60,311. A Bachelor's in Computer Science costs just $17,052, but pays off very quickly with a median salary of $69,338.

Dr. Gillen said that one of the most important takeaways from the study was the high amount of debt borrowers take out for graduate degrees.

At the undergraduate level, we do have limits on how much students can take out, but what they have done is constrained overborrowing at the undergraduate level for most part, he said. At the graduate level, the overborrowing is really concerning. The federal student loan limits for independent students are $31,000 for dependent students and $57,500 for federal students. PLUS loans for graduate students don't have the same borrowing limit, which makes it easy to overborrow while pursuing a post-secondary degree. Besides, federal loans have the highest interest rate of all private loans and have 6.28%.

Student loan expenses can be a costly burden on your budget, preventing you from achieving financial milestones like saving for retirement and buying a house. So how do you pay off student loans and quickly save money while doing so? What are a few things to consider.

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Student loan refinancing is when you take out a new student loan with better terms to repay your existing loans. Qualifying for a lower loan interest rate can help you reduce your monthly payments, get out of debt faster and save money over the life of the loan.

Because student loan refinance rates are near all-time lows, now is a good time to refinance your student loans. Well-qualified borrowers who refinanced using Credible to a shorter loan term were able to pay off their debt years faster and save nearly $17,000 over time.

If you have federal student loans, keep in mind that refinancing to a private lender will mean you'll lose some benefits like COVID - 19 deferment, income-driven repayment plans and student loan forgiveness programs.

Setting up direct deposit on your student loan ensures you never miss a payment, but there is an added advantage of enrolling in automatic payments. Many lenders offer autopay discounts or lower interest rates in the form of a lower rate. It can help you save even more money while repaying your debts, while you are already paying off your debts.

If more than 50 thousand is required to pay out interest on new loans, pay more in advance than the minimum amount of deposit unless they pay cash back, and then reduce the interest.

Your Student Loan payment is the minimum amount you owe, but you may be able to save thousands and pay off your debt faster if you can afford to make more than the minimum payment. Use Credible's student loan payment calculator to see how paying off your loans faster can save you money over the life of the loan.

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