Millions of graduates are dealing with a mountain of student loan debt and are looking for ways to unburden themselves sooner. When it comes to paying off your debt, the sooner the better – interest can add tens of thousands to your cash outlay while paying it off faster can save you big. With that in mind, here are four ways to pay off your student loans in record time!
#1 Pay More and More Often
Making the sacrifice of less disposable income now can save you big in the long run. Making more than the agreed-upon payment will reduce your balance faster and save on interest. Your lender can’t say “no” to higher payments even if they don’t like it. But with so many students defaulting and deferring, seems like they’d appreciate the extra cash in their coffers.
Second, pay more often. If you get paid on a bi-weekly basis, plan on making a payment twice per month. This will help balance your budget, reduce the chance you’ll forget a payment and will chip away at interest and principal even faster.
#2 Scrape Up More Money
If your salary only covers your basic monthly payments on your student loans but you want to get out from under the debt mountain ASAP, consider other sources of cash to apply to your debt. Consider a side job such as a low-key second job working at a book store, a weekend or evening gig at a local pizzeria, tutoring or side work.
Whatever you do for a living 40 hours per week may be a lucrative sideline in your spare time. If you write, shoot video, can repair cars, paint or use a power washer, you can get odd jobs and side work to earn funds to dedicate to your student loans.
#3 Get a Better Interest Rate
Consider options to get a lower interest rate. The only way to get a lower monthly payment amount without extending the repayment term (resulting in an increase in total amount paid) is to score a lower interest rate. Ask your lender(s) if there are any programs to reduce interest. Direct debit payments (or EDA) may score you a modest interest rate deduction.
Consolidation may help as well, as long as it lowers your overall effective rate. If you have several loans at different rates, you must look at the total effect. If you have some loans at 3.4%, some at 5% and some at 6.8%, a consolidation at 6% may not be worth the trouble, but one at 5% could be. It depends on the amount of each loan at each interest rate. You have to look at the total payoff for each loan, sum these and compare them to the total payoff for the consolidated loan to know if it’s a win for you.
#4 Look for a Forgiveness Program
The optimal way to pay off your loan is to get it paid off fast with the minimum amount out of your pocket. Student loan forgiveness programs for teachers in key fields, public service positions and other programs offer dollar or percentage amounts of loans forgiven for certain terms and lengths of service. If you are working in a high-need field or public service already, it’s worth researching to see if there’s a program available to you!
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