GUIDE TO PAYING OFF YOUR STUDENT LOANS FASTER
Paying off your student loans can seem as a very difficult process or even unattainable, just like any other forms of loans, like business or credit card loans. The surest way to start paying off your student loans is to pay more than the supposed monthly commitments. This will save you a ton of money with respect to the applicable interest rates. Student loan forgiveness is still an ongoing discussion with no definite guarantee, so it’ll be wise to not depend on it entirely.
In this regard, we’ve curated this guide to help you not only pay off your student loans, but to do it even faster
1. Start repayment while you’re still in school
It’s a popular knowledge that even while you’re still in school, interest is already being added to your private student loans. Consider a 4 year undergraduate college degree coupled with the ever rising interest rates, this in essence is accumulating several dollars in disguise. As soon as you can, start making payments to reduce interest. By making interest payments as you earn your degree, you can save thousands of dollars over the course of the loan period.
2. Find ways of increasing your cash inflow
This can be in different forms; like asking for a raise from your employer or working a side hustle. Getting to increase how much commitment you make towards your student loan debt will not be entirely possible if the income still remains on the same level. This shows that all your income goes to cater for your expenses, but with any increase in the income level, there’s going to be a surplus, which can be channeled into settling your student loan debt. Also, consider allocating any extra money like gifts towards your student loan immediately.
3. Lower Your Living Expenses
As you try raising your income, the other side of the coin is reducing your expenses. Generally, expenses such as rents or mortgages are not easily cut down in the short term. But budgets on other expenses like gas, food and stationary can be revisited and restructured.
If you’re still a student, consider downsizing to a cheaper apartment or moving in with a roommate or two. If you often eat out at restaurants, try meal planning and cooking at home. And if your car payment is a stretch, consider trading in your car for a less expensive vehicle. You’ll be surprised by how much you’ve saved after a month or two of dedicated lifestyle change.
4. Signup for Autopay
You can reduce the interest rate on your student loans if you don’t want to refinance them by enrolling in autopay. This is possible If you allow federal student loan servicers to automatically take payments from your bank account, they will reduce the interest rate by one-quarter point.
A lot of private lenders also provide auto-pay deductions. To enjoy such benefits, simply contact your servicer to get enrolled or better still inquire if an autopay discount is available.
5. Consider refinancing if you have a good credit
You might consider refinancing your international student loans with a lender based in the United States in order to pay off your student loans faster. If you refinance student loan debt, you could score a lower interest rate, and since less of your money is going to interest in this case, you might be able to afford extra payments on your refinanced loan. Many refinancing lenders in the U.S. don’t charge a prepayment penalty, so you probably won’t have to worry about racking up any prepayment fees either.
6. Pay more than the minimum towards your principal
Making additional payments or paying off student loans earlier will never incur fees. The hitch with prepayment is that the companies in charge of billing you – Student loan servicers – may add the extra cash to the payment due the following month. That advances your due date, but it won’t help you pay off student loans faster. Instead, instruct your servicer — either online, by phone or by mail — to apply overpayments to your current balance, and to keep next month’s due date as planned.
7. Work with a student loan assistance company
Even companies such as Google and Nvidia match and pay about $2,500 and $6,000 respectively of their employee’s student loans. So do several other big tech companies. If paying off student loans is on top of your financial goals, you should consider finding a job with a company that’ll help you in this regard. Note that international student loans are not always eligible for this benefit — you might need to refinance your student loans with a U.S. based lender to qualify for employer-sponsored student loan assistance.
In Conclusion
I want to add up with the fact that you’re not alone. The statistics show that 45 million (13.5%) of Americans have student loan debt according to a January 2022 census data analysis. Getting rid of your student loan debt is not a one day feat. Even though loan forgiveness is the best kind of student loan relief, it is extremely hard to come by. I hope this guide helps you as we all strive towards a safe and secure financial future.