You know the student loan debt crisis has reached a new level of insanity when a new television game show is designed to help borrowers pay off their college debt.
TruTV’s “Paid Off,” airing on Tuesdays at 10/9 central, aims to help contestants win money to pay down their student loan debt faster. Perhaps this is a good time for the new game show as, according to Student Loan Hero, the average student loan balance for Class of 2017 graduates hit $39,400.
Read on to learn more about the show and find out how you can better manage your own student debt.
How “Paid Off” Works
The trailer for the first season of “Paid Off” includes hopeful contestants sharing their student loan balances and answering Family Feud-style questions. Other episodes feature other questions of different styles.
There are four total rounds, three of which pit contestants against each other. The final round offers one contestant a chance to eliminate his student loan debt entirely. In that round, the contestant must answer eight questions correctly in under a minute. However, it isn’t an all-or-nothing prize. Instead, the contestant gets credit for each correct answer.
Those who don’t make it to the final round don’t leave empty-handed, though. The first and second contestant eliminated receives $1,000 and $2,000, respectively. According to Forbes, the makers of the game show hope to give away roughly $500,000 during its inaugural season to over 60 student loan borrowers.
As with any game show, contestants are required to pay taxes on their winnings, even if they use the earnings to repay debt.
How Effective Will “Paid Off” Be?
Handing out half a million dollars to help student loan borrowers will undoubtedly make a difference for each person who wins money on the show.
But, unfortunately, that amount barely scratches the surface. Americans carry more than $1.5 trillion in student loan debt, according to March 2018 data from the Federal Reserve. So, while the game show does some good, college students and graduates need other solutions to fix the growing problem.
What’s more, incoming freshmen typically don’t get a crash course in student loans or how to use them wisely. The idea of getting what they need today and putting off payment for later is appealing. And, once you graduate, it’s not always easy to get relief. For instance, it’s virtually impossible to discharge student loans in a bankruptcy.
Three Smart Tips on Taking out Student Loans
When planning for college, it’s important to reduce your reliance on student debt. You can do this by looking at ways to graduate without borrowing a ton of money. Read on for three smart options.
Reconsider Your School Choice
You don’t need to attend a college with a household name to enjoy a long and lucrative career. Once you’re a few years into your career, your work record will likely speak louder than your degree. As such, you may be better off attending a less expensive school with a good track record than spending more for a degree that might not offer much more value in the long-run.
Learn About How Student Loans Work
There’s no college class that explores the ins and outs of student loans, but you can find out more about them on your own.
There’s a wealth of information online about student loans, including federal and private student loan options. If you still have questions, set up an appointment with a school’s financial aid office to get the answers you need.
Remember, you may be making student loan payments for as long as 30 years after you graduate, so it’s imperative that you understand what you’re getting yourself into from the start.
Consider Student Loans as a Last Resort
Instead of looking to student loans first, consider other ways you can pay for college. Here are just a few ideas:
Scholarships: Websites like Scholarships.com and Cappex.com can match you with thousands of scholarship opportunities. If you apply for a bunch of scholarships, you may get some cash that you won’t have to pay back.
Grants: Fill out the Free Application for Federal Student Aid (FAFSA) each year before the school year starts. This form helps the U.S. Department of Education determine how much financial aid your family is eligible for.
Also, check to see if the schools you’re interested in offer grants for your major.
Part- or full-time work: By working just 15 hours a week and earning nine dollars an hour, you can earn more than $28,000 in a four year period.
Even after taxes, this can make a huge difference in your need for student loans. If you can manage to work more hours or get a better-paying job, you could reduce your dependence on student loans even more.
Paying Off Your Student Loans Without the Help of a Game Show
If you’ve already graduated and are trying to figure out how to pay down your student loans, winning a game show sounds like an easy solution. But unless you’re fortunate enough to get on the show and win the cash, you’re on your own. Here are some ideas to pay off your loans faster:
Look Into Loan Forgiveness Programs
If you have federal student loans, you may qualify for one or more loan forgiveness programs. The Public Service Loan Forgiveness program, for example, requires you to work for 10 years for a government agency or eligible nonprofit organization.
Keep in mind that these programs have strict requirements and you typically need to commit to a specific number of years of service. But if that’s already part of your career plan, you could be well on your way.
Consider Refinancing Your Student Loans
The lower your interest rate, the more you can save on interest over the life of your loans. Several student loan refinancing companies offer low fixed and variable interest rates that can make it easier to pay down your debt.
Just keep in mind that if you refinance federal student loans, you lose access to income-driven repayment plans and loan forgiveness options.
Boost Your Cash Flow
Whether or not you choose one of the other options we’ve discussed, cutting back on other expenses and earning more income is a straightforward way to save money to eliminate your student loan debt.
If you have a hard time saving, consider getting help from an app or savings tool. Chime’s automatic savings program works by rounding up every transaction you make with your Chime Visa debit card to the nearest dollar. The round up amount is transferred to your Chime savings account. This kind of savings tool can help you set aside more money for debt repayment without even thinking about it.
Depending on where you are in your student journey, there are ways to reduce how much student loan debt you take on or to eliminate that debt more quickly.
As you consider these tips, the important thing is that you have a plan. The sooner you get rid of student loan debt in your life, the easier it will be to achieve your other financial goals. That’s what we call winning the game.