There’s a lot to expect and talk about when starting college. One prominent topic of discussion is paying for college. With tuition fees skyrocketing, many students look to student loans as the only option to support their education costs.
While the rapidly increasing college tuition fees make it easy for college students to take out loans, it’s equally important to understand how to spend the money wisely and look for meaningful ways to pay them back at the earliest possible.
It can be worthwhile to take on student loans when it leads to a more tremendous earning potential or job satisfaction. However, having student loan debt can impact many other aspects of your life, for instance, buying a home or saving for retirement.
The thing about loans is they must always be repaid. Lowering that number sooner rather than later can help you focus on your other life goals.
Ideas to Get You Started
Sign up for Autopay
Signing up for autopay is one of the simplest ways to reduce student loan debt. The reason is that when you sign up for automatic payments for your student loan debt, you can be eligible for a discount from your lender. With a discount on your interest rate, you can ultimately reduce the total amount you owe otherwise.
Although in the short run, the discount may not make a huge difference, in the long run, it can help you pay off your student loan debt faster and save some money on your overall amount. Plus, you’ll get some peace of mind by never missing a payment.
Use Financial Tools
When you want to reduce your student loan debt, you can look up the financial tools that can help with your debt solution. For instance, when you have private student loans, a combination of personal and federal loans, or want to take advantage of low-interest rates, refinancing or consolidating your debts can be a viable option.
You will be required to take a new loan at a relatively lower interest rate to pay off your existing debts. Henceforth, you can make a single monthly payment to your new lender. However, it is always advisable to analyze your situation and consider the pros and cons of adopting those financial tools.
Make Extra Payments
Using any extra money you have towards your student loan debt can be another excellent way to pay off your student loan faster. Extra money might be cash gifts, savings, cash rewards from a credit card, or tax returns.
This helps reduce your student loan debt burden over time. Consider a situation where you may have to pay a minimum of $300 monthly. Instead, if you paid a lump sum of $3000, you are not only using the extra money to relieve yourself for now but also reducing your overall payment duration.
Also, if you use your tax return to pay off your student loans every year, you might be able to reduce your repayment duration in half.
Don’t Pay Just the Minimum
Paying more than the minimum required amount is always a good strategy to eliminate debt. Even a tiny amount added to your regular student loan payment can be beneficial in the long run toward reducing your total debt.
Attempt Bi-weekly Payments
If possible, break the payments in half and make bi-weekly payments. You make one extra monthly payment when you give away half the costs. With bi-weekly student loan payments, you can pay off your loan a year sooner and save money overall.
Seek Assistance Options
In some cases, student loan repayment is included in employee benefits packages. Some employers may offer incentives for employees to pay off their student loan debt. Employer assistance can come in different forms and it’s best to confirm your employer provides benefits like this. You may be eligible for matching monthly payments toward your student loan debt, up to a certain sum per year or over the life of your loans.
Following the advice above can help you make your student loans more manageable and make payments easier by significantly reducing them. However, it is necessary to determine which steps are compatible with your budget and timeline. You may also mix them up with one or more strategies according to your convenience.
You may want to pay off your student loans for various reasons. For example, you might want to prioritize other financial objectives or you might be held back from achieving other milestones in life because of your obligation towards the student loan debt. Maybe your student loans are becoming too stressful for you, and you want to get rid of them soon.
Some student loan borrowers want to lower their monthly payments, even if it means paying for a more extended period, while others are more eager to get out of the debt for good.
Whatever your reason, if you have a steady income, an emergency fund, adequate retirement savings, and no high-interest debt, you may be able to reduce your student loan debt. Consider one or even a few of the strategies listed above to help pay off your student loan debt faster. Good luck!
Lyle Solomon has extensive legal experience, in-depth knowledge, and experience in consumer finance and writing. He has been a member of the California State Bar since 2003. He graduated from the University of the Pacific’s McGeorge School of Law in Sacramento, California, in 1998 and currently works for the Oak View Law Group in California as a Principal Attorney.