Do you sometimes fear that you’ll never get out of student loan debt? You’re not alone. Paying off student debt is a long slog and it can be both discouraging and exhausting – especially if you are one of the millions of Americans with more than the average college debt of $27,975.
But that doesn’t make it impossible! In fact, people succeed at paying off their loans every day. So what are they doing differently? They’re following one or all of these 10 great tips:
1. Set Up Automatic Payments
Signing up to have your payments automatically come out of your account is a great way to ensure that you make all of your payments on time. Because the funds will come directly out of your bank account each month, you won’t have to worry about remembering to make your payment. One benefit of signing up for auto-debit is that some private student loan servicers will give you a discount on your interest rate if you do so. While it might be small – every little bit helps and adds up.
2. Pay Your Interest While In School
Unless you have subsidized student loans, your student loans will start accumulating interest as soon as you take them out. Paying your interest while in school is a simple way to keep your student loans under control. It will also ensure that when you start paying your loans back you will only owe what you originally borrowed.
3. Create a SMART Repayment Goal
We’re more likely to stay on track with our goals when we make them SMART goals. SMART stands for specific, measurable, actionable, realistic and time bound. Decide to commit to paying back a particular chunk of your loan within a specific period of time. For example, you might decide to pay back $10,000 of your student loans in the next year. This will give you something to shoot for. Break it down by month and create a plan for how you are going to make sure you have the extra money each month to put towards your loan.
4. Make a Budget
This one seems like it should go without saying but only 32% of Americans create and stick to a budget every month. Those who don’t use a budget, generally don’t know where their money is going. By tracking your spending, you might find areas where you can save money and redirect those funds towards your student loans. Then you can make a budget that includes your student loan debt repayments.
5. Check Out Your Repayment Options
Many people don’t understand all of their student loan repayment options. Take some time to read through your options and find the repayment plan that is right for you. With changes to Pay As You Earn, you might find that you are now eligible for an income based repayment plan when you weren’t previously. Just remember that the longer your space your payments out, the more you’ll pay overall in interest.
6. Consolidate Your Loans
Consolidating your loans with a private lender can offer a way to lower your interest rate. Private student loan consolidation, or student loan refinancing, is offered by private banks and lenders. It’s a way to consolidate multiple federal or private student loans together, and an approved applicant will receive a new interest rate as well. If the applicant has great credit and high income, then he or she has a chance at getting a lower interest rate on the student debt. This lower interest rate should save the borrower some money which should help pay down the loan.
>> Read More: How to consolidate student loans
7. Direct Additional Income To Your Loans
Don’t be taken in by lifestyle inflation! Rather than continuing to spend more money as you make more or using any unexpected monetary windfalls like bonuses to treat yourself, commit to putting any additional income towards paying down your student loans.
8. Pay More of the Principal
If you’re paying extra money every month towards your loans, make sure to call and ensure that those additional funds are going towards the principal of your loan. Some loan servicers count additional funds as pre-payments of future monthly payments. But you want them to put those funds towards the principal which will decrease your interest and overall payments over time.
9. Know Your Student Loan Forgiveness Programs
You might qualify for a student loan forgiveness program and not even know it. There are a number of different forgiveness programs which you might qualify for– especially if you work for the government or in the medical, military or veterinarian fields.
10. Get a Side Hustle
A side hustle is something you do to make additional money on top of your main job. For you, a side hustle could mean taking a part-time job on the evenings or weekends. It could mean freelancing, tutoring, or working as a wedding photographer on the weekends. You could sell crafts on Etsy or start your own blog. Find a way to make extra money and put that money towards your student loan debt.
Author: Dave Rathmanner
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