You can’t put a price on a good education, maybe. But many people still face the grueling task of paying off their student loans while they save for a house, pay the bills, and start a family.
If your student debt is making you feel overwhelmed, there’s a way out. First, you’ll have to revise your student loan repayment strategy. And that begins with knowing how to pay off your student loans faster.
This guide offers you great options to pay off your loans quickly. Let’s begin.
1. Pay More Than The Minimum Monthly Payment
One of the simplest ways to reduce your student debt is to add an extra payment to the regular payments you make already. Of course, you should have loan payments set up already, so any additional payments go toward your principal.
Here’s an easy way to do it: set up automatic payments with the additional amount. It takes any indecision out of the way and makes it difficult for you to change your mind. It doesn’t matter the amount you add, even if it’s $30 a month.
You can start at $30 or even $20 and gradually increase the extra payments. You can search for a side hustle to make the additional payments.
2. Take A Job That Grants Loan Forgiveness
Some specific jobs like teaching or public service may offer student loan forgiveness for all or part of your student debt. What you need to do is qualify for the requirements to get your loans forgiven.
For example, if you choose Public Service Loan Forgiveness, your remaining balance will be forgiven after making 120 qualifying payments. That means you’ll have to work ten years in a qualified organization and make ten years of payments.
Since these forgiveness programs usually come with income-driven repayments, your payments will reduce. However, the interest charges will still accrue. So if you’re unable to qualify for any forgiveness, you’ll end up with massive interest charges.
So you need to consider the potential downside before you proceed.
3. Apply For A Raise
If you work at a job that offers yearly raises, you can ask for a raise. If you do get a raise, you could get a better car or exotic vacation. But why not direct that extra money to your student loan repayment?
You can put half of the raised amount towards your loan repayments. That means either increasing your automatic student loan repayments or transferring the money to your savings account.
4. Avoid Loan Repayment Programs
Keep in mind that the effectiveness level of this point varies. For example, maybe your focus is on lowering your loan payments. This makes sense if you’re struggling to make your payments.
But if your goal is to pay off your student loans faster, you may have to avoid income-driven repayment programs.
That’s because nearly all these federal student loan repayment programs decrease your payments by increasing the term of your loan. So it’ll take more time to pay off your student debts.
For example, PAYE lengthens your federal loan repayments from 10 years to 20 years. And even direct loan consolidation can prevent you from paying your student loans faster.
That’s because you combine all your student loans, which come with different interest rates, into a single loan. When you do that, you can target the high-interest loans with additional payments.
5. Decrease Your Budget
If you want extra money but can’t simply increase your income, decrease your budget. We admit it may sound extreme. But some people have reduced their budget by moving to a cheaper apartment, stop dining out, and opt for more side income.
The good thing is that you don’t have to trim your budget permanently. The main goal is to focus on paying your student loans faster. The quicker you pay off your debt, the faster you get back to your regular life.
So find ways to trim your budget, and you’ll be thanking yourself later.
6. Be Smart With Your Student Debt
The first step in paying off your student loans faster is to make additional payments. But how you apply that extra money can make a difference. For student loans, it’s ideal first to pay off the highest interest loans. It’s called the debt avalanche method.
Sometimes, it might be better to target private student loans first before federal loans. This is because paying back private student loans usually means higher interest traits and strict repayment terms.
Private student loans can have variable interest rates too, which means your rate could increase with time.
Another option is to use the snowball method. This is where you pay off your student loans from the lowest balances first. Even though you won’t save much on interest, you can get the psychological boost to help you get rid of your debt.
Choose the method which works best for you.
We’ve outlined the best ways to pay off your debts faster in this guide. It’s now up to you to choose the one that works best for you. If possible, get in touch with a student loan expert to give you the right direction in your current situation.