Paying off your student loans faster is a brilliant idea. With the average graduate owing $31,100 in student loan debt, it’s crucial to find ways to pay your loan back to be debt-free as quickly as possible – but not all options are created equally. In this blog post, we’ll explore several tips on how to pay off student loans faster and get on with your life!
Table of Contents
1. Sign Up for Autopayment
Signing up for auto-payment will allow you to pay your loans faster. In addition, many loan lenders offer an interest rate deduction for those who have autopay set up.
2. Create a Personal Budget and Stick To It
Creating a budget is the key to successful money management.
You can more efficiently allocate funds towards your student loan payments when you know where every penny is spent.
3. Make Extra Payments When Possible
Making extra payments will help reduce the interest you pay on your loans.
You can make additional payments by sending in more than the minimum each month or a one-time lump sum payment.
4. Refinance Your Loans for a Lower Interest Rate
If you’ve been paying attention to current interest rates, you may be able to refinance your student loans and get a lower interest rate.
This refinancing process could save you thousands of dollars in interest payments over the life of your loan, so it’s something to consider if you can qualify.
5. Make Some Spending Sacrifices
Making some financial sacrifices can help you free up the funds needed to make larger payments.
Sacrifices could mean choosing a smaller house or car, for example, and putting any extra money towards your student loans instead.
6. Utilize Tax Credit
If you’re interested in pursuing a program that will allow you to repay your loans faster, check out the American Opportunity Tax Credit.
This credit is worth up to $2500 and can pay off undergraduate and graduate school expenses.
If you qualify for this tax deduction, it’s vital to ensure that all forms are filled out correctly, as violations could result in penalties.
7. Make Biweekly or More Than One Monthly Payment
Split your monthly loan repayment in half and make one payment every two weeks.
This split will help you avoid interest charges because you’ll be making more than one payment per month.
However, this split option isn’t always available for all as it depends on the terms of your agreement with the lender but if it is, utilize it.
8. Make Use of Loan Forgiveness Programs and Repayment Plans
There are several government-sponsored student loan forgiveness programs available to those who qualify. If you’re eligible for one of these loan forgiving programs, it can be a great way to get rid of your loans sooner rather than later.
If you’re struggling or having challenges making your monthly loan payments, these programs are available to reduce or eliminate the amount you owe.
The Department of education has some repayment plans to help you sort out your student loans faster. Here are some plans below.
– Standard Repayment Plan: This is a plan in which you make fixed monthly payments for up to ten years. Your monthly payment will be based on how much money you borrowed, the interest rate, and other considerations such as the length of your loan term.
– Graduated Repayment Plan: Under this plan, your monthly payment will start low and increase every two years. This graduated plan is best suited for borrowers who expect their income to increase steadily.
– Income-Based Repayment Plan (IBR): This plan caps your monthly student loan payments at 15% of your discretionary income. After 20 years of qualifying monthly payments under this plan, the U.S. Department of Education offers several methods by which borrowers can pay back their federal loans more quickly.
This opportunity is granted based on how much money they owe or what payment plan best fits their needs. To find out if you are eligible to receive one of their faster repayment methods, you must contact them directly.
9. Paying Your Loans off Early
Although not everyone has this option, putting it towards your student loans can help shave years off the repayment process if you have extra cash. This early pay-off is an excellent option for those who want to be debt-free as soon as possible.
10. Get Creative, Sell Some Stuff
Look around and see if you have things you can sell to generate some money to help pay off your student loans.
If you don’t can’t think of anything to sell, take a look at sites like eBay or Craigslist and see if there’s anything there you currently own that you don’t need and you can part with for good money.
There might be some gems hiding in your basement.
11. Get a Side Hustle or Freelance Work
Working a side hustle can be a great way to make extra money towards your student loan payments.
This extra cash can also help you build your resume and gain experience in a field you’re interested in pursuing.
If you have no plan or idea of how or where to start your hustle, take a look online for some ideas or reach out to friends and family members who might need some help with odd jobs around the house.
Also, check out Fiverr, Upwork, and more for freelance opportunities.
12. Consolidate Your Loans to Pay Your Student Loan Faster
If you have multiple loans, it might be better to consolidate them into a new loan with a lower interest rate.
This consolidation will help reduce the amount of money you pay in interest over time and simplify your monthly payments.
Just be sure to read the details and the fine print to know what fees and penalties are involved.
13. Unexpected Cash
Take advantage of bonuses and windfalls. Use any unexpected money – like a bonus at work, inheritance money, or gift – to put towards your loans.
This additional bulk sum is a great way to make extra progress on your loan repayment without doing anything further.
14. Find Other Loan Repayment Programs or Opportunities
Several programs are available to help those with student loans pay off these debts more quickly.
Constantly look for new opportunities and seek advice from qualified financial advisors as you may have some unique circumstances that may work in your favor with your student debt.
There are many different ways to repay your student loans more quickly – it all depends on what works best for you.
By following most of the tips here on how to pay off student loans faster, you’ll be on your way to becoming debt-free in no time!