9 Ways to Pay Down Student Debt Faster
Any student with student loan debt knows that it is the biggest burden they have to face, and by far the hardest to pay down. To make matters worse, you pay not only the interest, but some of the principal as well. Then, there is the additional fact that with each passing year, your debt can only increase, compounding interest and working against your debt payoff. With the cost of college rising every year, the fact that interest rates were lowered to make this cost somewhat easier to bear is a good one, though even this small reprieve might encourage some people to hit the snooze button on their debt.
If you’re a student who is facing student loan debt, then there is a good chance that you are having a hard time imagining what life will be like after graduation. You may be forced to take a job that is low paid and doesn’t utilize your education, only to have to hand over at least half your earnings to pay off student loans in addition to the things that you need to live your life. It can get so bad that you might even feel like it would be smarter to make more money working less and then pay off the loans more quickly.
Make More Than the Minimum Monthly Payment
The first thing most people do when they get their student loan bill is burn it into the ground. Or, they put it off for later.
I was no exception to this. Instead of paying them off at nearly 7% interest, I neglected to take care of them. That wasn't because it was difficult. I mean, it was, but that's not why I didn't do it. I didn't pay them because it just didn't seem worth my while. I didn't get into any crazy amounts of debt with student loans. I wasn't coming out of school with six figures unpaid on my loans. To me, it just didn't seem worth it. So I didn't pay them.
But that's because student loans were created the way they are by banks. That's not because they had any legitimate purpose. They were created to make us pay as long as possible. So the threats on interest rates are designed to get you even more worried. The interest rate alone is designed so that you can't possibly pay them off in a reasonable amount of time. The letters and phone calls are designed to get you so bogged down that you give up.
It's time that changed.
Try the Debt Snowball
If you’re carrying debt from student loans, the debt snowball method of paying off your student loans faster is a GREAT place to start.
The debt snowball method is a consumer debt elimination method in which you prioritize your debt payoff from smallest to largest, regardless of interest rate. This is a great way to start attacking your debt because it gets you excited about paying off the debt and reaching your goal.
Student loans can seem daunting. Add the fact that they are a lower priority when the interest rates are low, and it becomes even more difficult to tackle them first.
So make swift, deliberate progress on your student loans first, and it will carry over to your other debts, positively affecting your entire financial picture.
It’s important to note that this method has been around for a long time, and many financial advisors still believe it’s the most effective way to pay off debt quickly. It’s widely used by consumers, and many of them have told us it’s been instrumental in paying off their debt.
However, the debt snowball method isn’t for everyone. If you’re carrying a large amount of credit card debt as opposed to student loans, you may want to try decreasing the credit card debt first while working on student loans.
Refinance with a Private Lender
If you haven’t refinanced your student loans already, you’re leaving serious money on the table.
If you take out a fixed rate, variable rate, or even a low-cost federal student loan through the Federal Direct program, there are better private student loan lenders that can give you a lower interest rate and a huge savings.
If your student loan provider sounds more like a government institution than a bank, it’s time to learn more about your options. An online lender like CommonBond wholly removed the government middle man from student lending and give you a better deal on your student loans. Even the companies like Sallie Mae and Wells Fargo, though they’ll still issue and service your student loan, will allow you to refinance your private student loans with a student loan lender like CommonBond.
What are the benefits of refinancing student loans through a private lender?
Lower Interest Rates – the average interest rate for a private student loan refinance is around 1%. That’s a lot cheaper than most federal programs.
Enroll in Autopay to Score a Lower Interest Rate
You can lower your monthly loan payment, especially if you have a long loan term, by using your student loan’s autopay feature. A majority of student loan providers, including Sallie Mae and Discover, offer an autopay feature that will automatically withdraw your required monthly payment from your bank account. This saves you the hassle of making the payment yourself and the risk of forgetting to pay off your loan in full each month.
To enroll in the autopay feature, visit the student loan provider’s website and use the on-screen options to enroll in autopay. You can also contact the loan servicer and ask their customer service department to enroll you in autopay.
When you enroll in autopay, the loan servicer should contact you and give you a confirmation number. If you decide to cancel autopay later on, make sure you contact the loan servicer and request a cancellation number.
Make Payments While You’re in School
Most people don’t necessarily know that you have the option of paying your student loans before you begin repaying them. You can pay up to three months worth of payments before you even leave the school. For most of us that still trying to figure out how to pay off student loans, this is a great opportunity to get a head start on making a dent in your debt.
All you have to do is know how to research and find the right repayment options. You can do this by comparing student loans and different repayment plans. This way you can decide whether you want to pay off student loans while you’re still in school or when you are ready to start repaying your loans.
Live Like a Poor Student
Student loans are a major source of financial aid for students who want to pursue higher education. Although having a student loan can restrict a student’s lifestyle, it also gives him or her greater freedom to pursue a career of choice.
In recent years, student loans have become an essential part of the financial toolkit of a typical student. Typical due to the fact that millions of students rely on student loans each year. In fact, in the United States of America, about 86% of all students take out student loans.
According to a Student Loan Hero survey, 41% of students get a job on campus to help pay for school; however, this is not an effective way of paying off loans because it will only reduce the amount of monthly loan payments by a couple of bucks.
Many students find it more challenging to manage their loans. Although some students hesitate taking out loans, others are unable to pay off their loans once they graduate.
The average student takes 9 years to pay off their student loans. But by following some of the tips below, you’ll be able to pay off your student loans faster than ever.
Alternatively, you can consider paying off your student loans ahead of time by getting a second employer who’ll withhold a percentage of your paycheck and use it to pay off your debt.
Earn Money On the Side
Paying off student debt can take years, even if you’re on a budget and pay the minimum payment each month. If you are someone who knows how to manage your finances wisely, you might find the task of paying off student loans much faster and easier than others. If you’re just starting out and trying to make it on your own, or if you’re new to the workforce with student loan debts, paying off student loans faster can seem like a daunting task.
If you have multiple student loans, you might be wondering which loans should you pay off first. How will you make that happen? Are there ways to pay off student loans faster?
One of the most important things to do when trying to pay off student loans faster is to live below your means. With student loan debts looming over you, you might feel like you’ll never be able to catch up unless you earn more money. That’s where the idea of earning money on the side comes in.
Earn money on the side: Do things that you’re already familiar with to earn more money. Look for flexible part-time and full-time jobs. Consider freelance work or freelancing on the side. This way, you don’t have to quit your job, but you can start earning additional income.
Throw All “Found Money” Toward Your Student Loans
It’s been proven time and again that if you don’t know where your money’s going, it will likely disappear, even when you’re trying to save it.
Once you get into the habit of categorizing and earmarking all of your dollars, you’ll have less and less of a hard time reaching your financial goals.
As a college-bound person, you probably don’t have a ton of money to manage. But that can be a good thing. Even small amounts of money can make a real difference when they’re combined and applied to one goal.
For example, all of the little money you find in your pockets after college “ like gift cards, money you found in your couch cushions, coins you’re about to throw out “ should go to your student loan debt.
Ask Your Boss for Help
Sometimes it’s a great idea to ask your employer for assistance in paying off your student loans.
Here are some of the more common benefits you can get:
Company-Sponsored Tuition Assistance
Tuition assistance is offered by most companies to help recruit “quality” employees. Some companies give up to a hundred percent tuition assistance, others offer up to many years of assistance. As long as you’re employed by the company, they’ll help pay for your education, and in return, you agree that you will stay with the company for a certain period of time, usually a year or two after you complete your studies.
Some companies offer loans to employees in need, for whatever reason. It’s most often the case that these aren’t limited to students. Generally speaking, the loan is interest free, though the amount may be limited. In some cases, they’re given as a part of your regular paycheck, and the company deducts the amount from your paychecks until you’ve repaid the loan.
Which strategy made the difference? 3 financial experts weigh in
Two years ago, I wrote an article explaining various strategies to pay off student loans faster than ever. I snooped around the internet to find some new strategies and compiled them to this list.
Before reading the strategies, keep in mind that they all make sense for the college-age crowd. If you’re looking for more strategies for retirement, I’m afraid you’ll have to wait for a few years.
I’ve found three financial experts to share their ideas on how to pay off student loans quicker. Some of these strategies were familiar but there were also some I’d never heard of. The experts we’re naming business owners and financial advisors.
Paying Off Student Loans with a Side Hustle
Paying off student loans, especially the dreaded college loan, is a major goal for many young adults today. With student loan debt at an all-time high, more and more millennials are facing student loan payments with a corresponding increase in anxiety.
Financing a college education is expensive, which is no surprise since tuition rates are climbing at almost four times faster than the consumer price index. But paying off student loans is more complicated than just the slow and steady method.
With that in mind, NerdWallet, a free online tool to manage your finances, conducted an analysis of their users to identify factors that helped them pay off their student loans faster. The results reveal how student loan holders can use a side hustle to help pay off debt faster.
Living the Poor Student Lifestyle
The idea that you graduate from college and instantly become a millionaire is pure fantasy. Most graduates end up working in jobs to pay off college loans. If they are lucky enough to land a job, they are definitely not earning enough to save up for retirement or to pay off college loans faster than ever.
But some millennials are determined to change their destiny and not end up as statistics. They understand that they need to make good financial decisions in order to live the life of their dreams.
Earning Money On the Side to Pay Down Debt
There are two types of ways to pay off debt faster than ever. The first is called rising income. Rising income is increasing your income on a monthly basis and using that new income to reduce your debt more quickly. The second is called reducing expenses. Reducing expenses is saving money on a monthly basis and using that money to pay down your debt more quickly.
How did you arrive at this debt? Chances are it was a little bit of both. You might have had a large reduction in income that forced you to take out the loans or you might have had a large increase in expenses and that is why you were approved for the loans in the first place. Regardless of how it happened you can work on paying down your student loans faster than ever by looking at your rising income and reducing your monthly expenses.
The Bottom Line
In short, there are many ways to pay off student loans faster, and one of them is to switch to a student loan with a lower rate of interest. Look for the lowest rate you can qualify for, and then pay more than the minimum amount owed.
Some student loan providers give a small discount for the amount of interest paid towards the principal balance of the debt.
Don’t panic if you’re behind on your student loan payments. When you can’t afford to pay your student loan, you can request for a deferment of your student loan payments.
It’s also important to note that you don’t have to make just one effort. Instead, you can combine several strategies for loan repayment and use them to speed up your repayment period. On the other hand, if you don’t want to take the risk, you can seek the help of agencies like The Student Loan Hero. These agencies will help you free from the problem of student loan payments.
About the Author
You Might Also Enjoy
- How To Save Money At Starbucks
- How To Score Free Movies In The Metro
- How To Get Free Concert Tickets For The Rest of Your Life