Published on October 19th, 2019 | by Bibhuranjan0
5 Tips to Pay Off Student Loans Fast
According to some estimates, almost 70 percent of college graduates use student loans to pay for at least some of their higher education expenses. Currently, more than $1.5 trillion in student loan debt is outstanding.
The average student loan debt balance in the United States is more than $38,000 per student, while some carry a 6-figure balance.
You may have heard stories about people retiring from the workforce and still making payments on their student loans. These regular monthly payments can erode your quality of life and prevent you from achieving financial security.
Everyone wants to pay off these loans as soon as possible, but how can you accomplish this lofty goal?
Paying off student loans when you are raising a family, starting your own business, or preparing for retirement is never easy to do. But, you can make steady progress toward your goal by applying these tips to your efforts.
Sign Up for Autopay
If you have not already taken advantage of your financing company’s autopay feature, now is the time to sign up. In some cases, lenders offer a discounted interest rate with enrollment in this program.
With a lower interest rate, more of your monthly payment will be applied toward principal deduction. This directly helps you to pay off your debt faster.
In addition, with autopay, the risk of making a late payment is eliminated. Late fees and other associated penalties can directly interfere with your timeline. Keep in mind that overlooked payments may directly extend the life of the loan and will work against you.
Make Extra Payments When Possible
When you set up automatic payments, consider establishing a regular payment that is higher than the minimum requirement. Even if this is only a few dollars more per payment, the impact over a lengthy period of time can be significant.
Any principal that is paid down today is debt that does not accrue interest charges in the years ahead.
In addition to paying a little more than what is required, apply all of your windfalls to debt reduction. These windfalls may be tax refunds or work bonuses.
They may also be cash gifts on birthdays and holidays. This is an excellent way to wipe out a large portion of the outstanding balance at one time.
Rather than make one monthly payment, consider breaking this into a half-payment every two weeks. For many people, making smaller payments more frequently is easier to manage on a tight budget.
In addition, when you make half-payments every two weeks, you will actually be making the equivalent of 13 monthly payments each year.
Paying extra money toward the principal earlier in the life of the loan can dramatically reduce the time it takes to pay it off because of the impact this has on interest charges.
If your student loans have a high interest rate, refinancing them through Great Lakes Student Loans may be an effective way to lower your monthly payments and to pay the debt off faster at the same time.
If you have multiple student loans, consolidating these accounts into a single loan can improve financial management and may reduce the risk of late payments. It may also result in easier debt reduction in some instances.
For those who have good to excellent credit scores, it may be easy to qualify for a lower interest rate on student loans through refinancing. You also can select from a range of term options.
High interest rates are stressful and taxing. Therefore, you may be relieved to learn that you can consolidate your student loans into a single loan with a lower interest rate and a shorter term.
By doing so, your monthly payment could be lower even though you are paying the loan off faster. The best way to determine what your options are is to speak to a lender directly.
Get a Job with Repayment Assistance
Many employers provide student loan repayment assistance as a job benefit. When you search for your next job, apply with employers who offer this type of program. In doing so you will be able to achieve tremendous savings and help.
For example, forgiveness programs for student loans include the Public Service Loan Forgiveness program. This is available through some government agencies as well as select non-profit organizations.
Some of the many other options are Teacher Loan Forgiveness, the Nurse Corps Loan Repayment Program, the Military College Loan Repayment Program, to name a few.
Prioritize Your Debt
The heavy burden of student loan debt can weigh you down for many years or even for several decades. However, with numerous debt elimination strategies available, you may be able to shave several years or more off of this timeline. Combine these tips for the best overall results.