Student loans can take a long time to pay back. Yet, you can save yourself time (and money!) by using these seven tricks to pay your loans off quicker!
Student loans can haunt you for a long time after you graduate. Paying them off as quickly as possible will not only save you a lot of anxiety but can also save you money.
If you feel bogged down by your student loans, you aren’t alone. According to Educationdata.org, the average student borrower is in debt by nearly $40,000.
Follow this seven-step system to pay your student loans off as fast as possible:
1. Pay More Than the Minimum
It makes sense that if you want to pay something off quicker, you need to pay a higher amount than necessary. Student loan payments are usually a set amount, but you always have the option to pay more each month.
One option is to make bi-weekly payments. This is especially helpful for those who get paid every other week. Instead of making one big payment that leaves very little from your paycheck, this option is more feasible.
Be aware that your overpayment may automatically apply to the next month’s payment due. Still, you can call the loan originator and tell them that you wish to use your overpayment to the overall balance instead.
Making more than the minimum payment cuts the repayment time by years if you do it right. It will also save you money in interest accrued over time.
2. Set Up Automatic Payments
Do you have a hard time remembering to make your payments on time? Or just want to ensure that you never miss one?
You can set up automatic payment of your student loan through your bank account or debit card.
Banks like this option as well since it ensures that they get their money. For this reason, they often sweeten the deal and offer a better interest rate, even if slightly, for those who choose this payment method.
This lower interest rate can save you money in the long run. Don’t worry; you are still able to make an additional payment if you want.
3. Make Payments Before Your Grace Period Ends
A grace period is a time when you don’t have to make payments on your student loan. This usually includes the time when you are still attending college and even a short period after for you to secure a job.
Although this grace period is beneficial, your student loan is growing throughout the years. That growth adds to the final bill and will accrue interest.
Paying any amount while you are still in school, even a small monthly payment, helps you pay less when you get out and pay it off faster.
So instead of thinking of your grace period as “payment-free,” consider it a time when you don’t have to make a payment but should when you can.
4. Refinance As Your Financial Situation Improves
Economics 101 taught you that a better interest rate saves you money. Along with a lower interest rate, a shorter term on a loan will save you money as well.
Starting out, you may not have been eligible for the best rates and loan terms. As the years go by, you may improve your credit and land a good job. Both of these factors will make you eligible for a better loan.
Refinancing your student loans at this time can save you thousands of dollars.
However, it’s important to note that you should not do this if you expect loan forgiveness or an income-driven repayment plan. Refinancing will harm your chances of these options.
5. Take Any Opportunity to Pay Your Loan Down
Even though the occurrences may be few and far between, we all come upon a time when we have more money than expected.
This could be from getting an unexpected bonus at work or a big tip from a generous soul. We may get a big cash gift from a relative or sell an item we no longer use.
Perhaps, you got a significant tax return one year.
Whatever the reason, this extra money is a perfect way to pay down your student loan.
Instead of blowing this money on a shopping spree, you don’t really need, think of it as a golden opportunity. Use windfalls to pay your student loans off quicker so you can be free from this debt once and for all.
6. Get a Side Hustle
If making extra payments on your student loan is impossible in your current situation, consider starting a side gig. You can use all or most of the profits to pay off your loan.
Need some ideas?
Check out this list of 50 profitable side hustles.
It’s never fun to work more, but just think about all the money you are saving by making more money to pay off your loan. Years down the road, you’ll be glad you did.
7. Ask Your Boss
Some jobs are starting to offer student loan repayment assistance. Employers are realizing that this greatly benefits their employees and attracts many of the best to work with them.
If you are still hunting for a job, look for a job that includes this in their benefits package. If you already have a position, consider asking for this benefit instead of a raise during your next performance review.
Conclusion
No one likes being in debt. It can be frustrating trying to see a financial improvement when you are still paying for the degree that allowed you to get your job in the first place.
There are so many benefits of paying your student loans off quickly. These seven steps above can help you see those benefits in real life.
[Author bio]
Adam Marshall is a freelance writer who specializes in all things apartment organization, real estate, and college advice. He currently works with Copper Beech Radford to help them with their online marketing.
