Once you have completed your education, it is time to start paying back your student loans. What is scary for most students is the fact that it can take anywhere between 10 to even 20 years to pay back your student loans! This time can be very stressful for most people, and the longer you take to pay back the loans, the higher the interest you end up paying.
A good strategy to avoid paying higher interest is to try and pay back your student loans quickly. This way, you end up saving yourself from the long term burden, and also save a little money on the interest accrued!
Here are the top 10 ways in which you can pay off your student loans quickly:
1. Payback More than the Minimum Amount
Most lenders will give you a minimum amount, which you need to pay back every month. As long as you make these payments on time, you will be able to pay back your student loans without a certain time period. However, if you can afford it, why not pay more than the minimum amount? Eventually, you will be able to pay off the principal amount much faster and even pay less in the form of interest.
2. Create a Budget
Once you graduate and begin earning your income, it might feel like the most natural thing in the world to spend your money as and when you wish. However, when you have student debts hanging over your head, this might not be the best option.
Create a budget for yourself, which allows you to live a certain lifestyle while still having enough to pay back your monthly student loan amount. Cut off unnecessary expenses until you have completely paid off your debts to make the process faster and smoother.
3. Refinance Only Your Highest Interest Student Loans
If you are someone who has taken several student loans, then this can be a good strategy to help you pay them back faster. You can consider refinancing your highest interest student loan. It will also help you save some money, so it is essential to research well and find the right sources to do this. You can reduce the monthly rates, lock in low, fixed rates, and even consolidate your student loans.
4. Make More than One Payment per Month
Of course, this depends upon your financial state and your income, but if you can, then it is always a good strategy to pay more than once per month. While typically, you are supposed to pay back your debts just once a month, there is no rule stating that you cannot make multiple payments. This will help you pay back your principal amount faster and save you a lot in interest as well.
5. Opt for an Automatic Payment Program
You can always sign up for a student loan service that offers automatic, paperless payments per month. This way, you know that you will never miss out on your payments, and neither will you constantly have to dip into your account and take out the money every month. This will just be done automatically for you till your entire debt is paid back.
6. Put aside a Student Loan Fund
Another good strategy to help you pay back your student loans faster is to set aside a student loan fund. In this fund, you should typically start putting in money, which will go into paying back your student loans. You should be very careful not to dip into this fund for anything other than paying back your loans. This will ensure regular payments and even make the whole process faster for you.
7. Opt for the Standard Repayment Plan
You will find many kinds of repayment plans which will lengthen the duration in which you can pay back the loans. While this might mean that you can pay back smaller amounts, it will also increase the time which will be taken to pay it back. If you want to look for a strategy to pay back your loans faster, then sticking to the standard repayment plan can be the best option for you.
8. Take Help of Your Current Job
Depending upon the kind of job you are currently doing, you may get student loan assistance as a part of your benefits package. It is important to speak to your boss about this and find out everything you can in advance.
In case you are working in the Armed Forces or you are a public servant, a doctor, lawyer, nurse, etc. you can even be eligible for student loan forgiveness or student loan assistance. Use these job benefits to your advantage to help you pay back your student loans faster.
Read Also: What is Student Loan Forgiveness in the USA?
9. Student Loan Interest Tax Deduction
In case you are eligible for student loan interest tax deduction, you can end up saving almost $2,500 per year! Saving this amount also means that you can put it back into the repayment of the loans so that you decrease the principal amount, thus, helping you pay back your student loans faster while also saving money on interest!
10. Pay off the Capitalized Interest
Capitalized interest refers to the interest which isn’t paid off. This interest keeps on adding to the balance, thus increasing the overall student loans, which you have to pay off eventually. The interest on your student loans accrue while you are still in school, but if you can make payments every month, then the student loan balance will be more comfortable to pay off since you can avoid capitalization.
In case you are still in the grace period (a time period where you are allowed to wait before you start making your monthly student loan payments), pay off the accrued interest immediately to lower your overall balance.
These are some of the best tips and tricks that you can use to help you pay back your student loans faster. There is no running away from paying back your debts, but the faster and easier the process, the better off you will be in the long run.