These simple tips will help you pay off your student loans faster
It is not easy to pay off student loans. Student loans aren’t just a problem for young people today. Student loans also burden adults. You may want to pay off your student loan faster than what the lender wants. You can do a few things to reduce your debt more quickly.
Pay more than the minimum amount due
You can accelerate the repayment of your student loans by paying more than the minimum amount due. It not only reduces the balance but also saves money on interest. Set your automatic deductions to include this extra amount so you won’t be tempted later to change your mind.
Consolidate Debt Options But Know the Consequences
Consider refinancing or consolidating your loan if you pay high interest rates. Consider consolidating your student loans to get lower interest rates or refinancing with a credit union or bank. Consolidating your debt can save you thousands of dollars in interest and help you pay off your debts sooner than expected.
Please be aware that refinancing will remove many of your consumer protections, including the ability to defer payments in the event of hardship or if returning to full-time education is the case. You could be sued or sent to collections if you fail to make payments. Your wages may also be garnished if you do not.
Refinancing your student loan to a personal one will not protect you in bankruptcy court. Because this is a legal protection student loan creditors enjoy, the refinancing lender will usually charge higher interest rates than those charged on government-guaranteed loans. The interest rate on federal student loans can be as low as 5%. Graduate loans are more elevated. However, refinancing into a personal loan may result in rates close to or above 20%.
Some lenders may even advertise monthly rates to reduce the shock factor associated with their APRs. For example, if you see a lender promoting a monthly rate of 1%, equivalent to 12% annual interest. The same goes for 1.5% monthly, equal to 18% APR, and 2% monthly, similar to 24%.
You can consolidate your debts by choosing a shorter loan term than the original. A shorter period increases your monthly payment, but you will save money on interest.
Use extra income to pay off your student loan.
Add a portion of your salary increase or bonus to the monthly payment for student loans. Consider adding 50% of your extra income to student loan payments, 30% to savings, and 20% for entertainment or discretionary expenditures.
Do Extra Work
Put your skills to the test. You can generate new income by working part-time or overtime, at weekends, or freelancing. These small earnings can help you pay off your student loans quickly.
How to Sell Items You No longer Use
You can dispose of items you no longer use. This includes clothing and shoes you don’t wear anymore, an Xbox or PlayStation under your TV, your bicycle or motorcycle, which you only ride once a month, and your treadmill in the TV room, where you dry your laundry. It could also include kitchen appliances in the dark recesses of your cabinets.
Rent out the spare room.
Renting out a spare room is a good idea, whether you live alone, in a family, or have a single room. Before you try this option, read any applicable rental agreements or covenants of the homeowners association. Use a written sublease or lease agreement before letting anyone else move your home.
Accept help from family.
If you let your family know they can contribute to your student loan repayment instead of giving you gifts for your birthday or holidays, they might be willing to do so. Ask your children to contribute if the debt is for them. Even if they’re still in school, a small contribution can help them understand that education isn’t free and encourages self-control. You should talk about what your child can do if they have graduated. Even small contributions can have a significant impact on the outstanding balance.
Negotiate Lower Interest Rate
Contact your lender via phone or their online messaging system. Few people know that just one call or email to your lender could save you thousands in interest. By discussing your repayment plan, you can negotiate a lower interest rate.
Ask Your Employer for Help
Medium and large employers are increasingly offering their employees financial support to retain them. Check your benefits package or ask your HR department if your employer will help you repay your student loans.
Direct Payments from Your Paycheck
Ensure that your payment due and payday dates are in sync. To avoid late fees, ensure your pay date matches your payment due date. Automatic deductions can reduce your risk of defaulting on a loan.
Streamline Your Budget
Reduce your monthly expenditures wherever you can to help reduce your debt.
Save money wherever you can. Even small changes to your monthly budget can make a huge difference in your debt repayment, mainly if you apply it to your student loans.
One of the best decisions you can make is to pay off your student loans faster than your plan allows. You can manage your debt in several ways, but doing nothing is the worst thing you could do. These tips will help you reduce your student loan debt quickly. You may need to consult Student Loan Counseling if you have trouble repaying your student loans. They can provide additional information and suggestions to help you speed up the repayment process.