If you’ve accumulated a significant amount of debt from student loans, it may be time to take action. Repayment can help you reach other financial goals, like retirement or homeownership.
The key is to find a plan that works best for you. Whether you’re taking out federal or private student loans, there are many ways to get your balance down and pay it off sooner.
1. Make More Payments
One of the most effective ways to pay off student loans quickly is to make more payments. This could mean making larger payments each month or putting extra money toward the principal of your loan. However, you need to make sure that your extra payments are being applied properly by your loan servicer.
If you don’t have the budget to make larger payments, look for small areas where you can cut back. This can be as simple as canceling cable or eating out a few times less per month.
You may also want to consider taking up a side hustle, such as bartending or selling crafts. These extra income streams can help you whittle down your debt quicker and save for life goals like retirement or a new car.
Another way to make more payments is to use the debt snowball method, where you knock out your smaller loans first. This strategy will allow you to feel the progress you’re making and can be a great motivator to keep on track.
In fact, many people find that working the debt snowball method can help them pay off their loans even faster than if they used an aggressive student loan repayment plan. In addition, by using this strategy, you can make sure to take advantage of any employer-sponsored student loan forgiveness programs.
Repayment programs like income-based repayment can be a lifesaver for many students who have trouble paying off their federal loans. These programs can reduce your monthly payments by lengthening the repayment term, but they can also increase the total amount of interest you’ll pay over time. This can add up to a lot of extra interest in the long run.
2. Pay More Toward the Principal
You can pay more toward the principal on your student loans in several ways. This strategy is a great way to free up cash sooner, which you can use for other financial goals.
The first step is to make sure that your extra payments are applied directly to the principal on your student loans. If you don’t have this option, then you can use a debt snowball or debt avalanche method to strategically apply your extra payments to one of your student loans at a time.
A debt snowball works by paying off the smallest loan first while still making minimum payments on all other loans. This strategy is effective because you’ll start seeing results soon and will have a good feeling of accomplishment when it’s done.
Another approach to pay more toward the principal on your student loans is by refinancing your existing loan. This strategy can lower your interest rate and reduce your overall monthly payments.
However, keep in mind that you’ll still be paying on your old student loans, which will take longer to pay off. Refinancing your loans isn’t an option for everyone, so be sure to weigh your options carefully before choosing this strategy.
Alternatively, you can use your tax refunds or other extra wiggle room to pay more toward the principal on your student loan debt. This can be a quick and easy way to knock down your balance, but you need to know how to apply it correctly.
You need to contact your lender and ask them how you can ensure that your extra payments are applied properly. Some lenders automatically apply your extra payment to your next month’s payment, which doesn’t do you much good. Others may have you send a letter with special instructions to your lender about how to properly apply your extra payment.
3. Split Your Payments
If you have several student loans with different interest rates, it might be a good idea to split your payments so that you can pay down more of the higher-interest loans first. This strategy will save you money in the long run and help you get rid of your student loans faster.
Another option is to use a loan consolidation service. These services often have lower interest rates and can help you whittle down your debt more quickly. They also can simplify your repayments, making it easier to meet all of your financial goals.
A good rule of thumb is to use a payment plan that has fixed monthly payments and offers a repayment period of 10 years or less. This way, you can focus on paying off your student loans while still maintaining a good budget.
Some lenders offer income-driven repayment plans that can cut your monthly payments based on a percentage of your discretionary income. These programs typically cancel the remaining balance after 20 years of payments.
To take advantage of this plan, you need to apply for it through your lender and submit a loan application form. You will need to provide your monthly income, your total student loan debt, and your current repayment schedule.
Once you have submitted the application, your lender will contact you to discuss your options. You can choose from a standard plan, which has fixed payments, or a graduated plan, which allows you to pay less each month and then increase your payments over time.
Regardless of your choice, it is important to keep track of all of your student loans and make regular payments. Doing so will help you stay on track to meet your goals and avoid any late fees or interest charges.
4. Move to a Lower-Priced City
When it comes to minimizing student loan debt, where you live can be the key.
GOBankingRates analyzed 100 cities across the US and ranked them based on the cost of living and the median salary of recent college grads. It found that the top-ranked city is not necessarily the most expensive, but it’s the most likely to allow you to pay off your loans in record time, if you can afford it.
When it comes to paying off your student loans, putting 15% of your disposable income toward them is the best strategy you can adopt. This might mean negotiating a raise with your boss, cutting back on other expenses or finding ways to make extra money.
You should also consider a student loan repayment plan that allows you to make larger payments and reduce interest charges in exchange for lower monthly payments. Some plans offer you a discount on your interest rate or even completely eliminate it over a certain period of time.
The right plan can help you save thousands of dollars in interest over the life of your loan and a lot of stress. The best student loan repayment programs offer many options, including deferment and forbearance, extended repayment periods, and loan forgiveness.
Moving to a lower-priced city could be the smartest financial decision you ever make. Especially if you’re looking for a job with a great pay and benefits package. This can be a win-win for you and your employer as it will help reduce the amount of student loan debt you owe. The best part is that it won’t be hard to find a job in your new city.
5. Find a Repayment Program
There are a number of ways you can find a repayment program that will help you pay off your student loans. These plans are offered by the government, and they vary based on your income and other factors. If you are struggling to make your payments, talk to your loan servicer about the various options available to you.
Another option is to apply for a loan consolidation. This can help you get out from under your debt faster by reducing the total amount of interest you have to pay and simplifying your monthly payment schedule.
Many employers also offer student loan repayment assistance as a benefit to their employees. These schemes often include a portion of your employer’s payroll taxes going toward the principal of your loans.
To take advantage of these programs, you need to have a steady, full-time job that pays well enough to afford the higher payments. If your job doesn’t qualify, you might need to consider a side hustle or other career change.
One of the easiest ways to find a repayment program that will help you make more payments is to look at your budget. This can be done by using a spreadsheet or an expense-tracking app, and it can be easy to see where you can cut back.
Keeping your costs down can mean cutting cable, eating out less and putting your tax refund toward your student loans. These are all small sacrifices that can have a big impact on your student loan repayments.
In fact, some people have paid off their student loans in two years or less by making extra payments. The most popular approach is to use the debt snowball method, where you list your debts from smallest balance to largest, then start paying off the smallest balance first.
