There are many things in life that are made worse if you do them slowly. Pulling off a Band-Aid stuck in arm hair, drinking down foul medicine and getting a body piercing are just a few of the things I can think of that are best done quickly. Student loans are another example of something that’s best taken care of as quickly as possible. Even if there’s a bit more pain, it will be over quickly and then you can relax. With that in mind, here are seven ideas to pay back your student loans faster:
#1 Get Informed and Make a Plan
In order to tackle your debt, you need to understand it. Sign up for a free student loan management account at Tuition.io so you can see all of your loans (even private ones!) in one easy interface, allowing you to see how much you owe to whom and track those decreasing balances once you start paying. With this info in hand, you’re better equipped to make a plan. We recommend the debt avalanche plan where you pay in additional funds on the highest interest loans first. You can read more about that here.
#2 Pay Early and Pay Often
There’s no reason you have to wait until you graduate to pay on your student loans. If you can work part-time during the school year and full-time in summer, you should devote this pay to loans you’ve already taken out or toward paying for school the next semester rather than taking out an additional loan. Any windfalls that come to you – tax refunds, inheritances, birthday or Christmas money – are all best put toward your debt. Send them in on your highest interest loans first and request they be applied to principal (not to subsequent monthly payments).
#3 Look for Repayment Programs
If you have too much debt to deal with or just don’t want to pony up the cash, look for a job with student loan repayment perks. Some military and government jobs will pay back a percentage or set dollar amount for each year in service so your balance will decrease each year and you’ll be ahead even if you later leave the job. Public service loan forgiveness eliminates remaining balances after 10 years of service and qualifying payments, but this is a big commitment. Programs that pay in each month or year on your behalf are preferable.
#4 Work More, Party Less
No one wants to hear this, but it’s true. If you take on paid overtime at work or snag a second gig to earn cash part-time, this can enable you to pay more on your loans and get rid of them quickly so you can get on with your life. The same goes for curbing your expenses and nightlife. Every movie you skip and night of clubbing you forgo will get you closer to killing off your loans and having them over and done with – then you can enjoy yourself guilt (and debt) free!
#5 Pay More Often
If you are paid bi-weekly (every two weeks) rather than monthly or semi-monthly (on the 1st and 15th typically) you can slip in an extra student loan payment each year and lower your interest paid overall. Set yourself up on auto-debit (which will also generate a .25% interest rate cut) and set it up so you are making a payment every payday. This will cut down on interest because it won’t accrue as quickly, due to the more frequent payments, and will result in one additional month’s payment each year. If you can’t afford to do anything else we suggest, at least do this one!
#6 Solicit Money
Tell your friends and family members that routinely gift you on birthdays and Christmas to instead help you pay down your student loans. You can set up a PayPal account they can deposit to or they can simply give you cash. Be honest and tell them how much you had to borrow for school and how it affects your life. Tell them the best gift they can give you is peace of mind knowing your loans are paid off so you can move on with your life. Be sure to devote all cash given to the cause and keep your family updated on your progress so they stay invested in your project!
#7 Tap Into Taxes
Be sure you are taking the student loan interest tax deduction when you file your annual 1040. If you normally get a refund, this will bump it even higher. And unless you’ve got a financial emergency that demands the dough, we recommend you devote your tax refund to your student loans. Take that lump sum and devote it entirely to your highest interest rate loan (be sure to specify to your lender that you want the payment applied to principal) so you can fast track your loans for payoff.
You may wonder why not take the entire 10 years to pay off your loans or why not sign up for Income Based Repayment even if you can squeak out your payments? The thing about debt is, the longer it lingers, the more opportunity there is for trouble. What if you have a career or health crisis in 13 years and want (or need) to take a sabbatical? Your debt can make this unbearable. What if you decide to abandon corporate life and be a volunteer? Your student loans make your life inflexible because all of your decisions are debt-driven. But by sloughing off your student loans as soon as possible, you free yourself up!
Be sure to check out our blog for articles on repayment strategies and student loans news and also see our student loan help center for How To guides on a variety of topics. And to get started tracking and optimizing your debt, sign up for free at Tuition.io!