Paying off your student loans is something that you have put on the back burner and as you now have graduated from college, it has become a reality. You have no choice but to pay them off. Unfortunately, whether or not you can afford to is not up for debate and you are responsible for them even if it means you have no money left over to live off of.
Student loan debt consumes a large part of many students’ income and it can be a large financial burden, especially if they do not move into their chosen careers with set, large salaries. Before you panic, you should consider the following things you can do to pay off your student loans fast this year.
1. Know Your Loans and Repayment Plan
Many students do not understand their loan and they do not know what their repayment plan is. This is a big no-no and you need to know how to prepare yourself. There are a variety of payment plan options for you to choose from, but if you do not do your research, you will be placed on the 10-year repayment plan, which is the standard one when you graduate.
If you find you are having trouble making the payments assigned to you, talk to your loan servicer now. Many students qualify for income-driven repayment plans and these plans take your salary and calculate your monthly payment based on your income. Some students who are facing financial hardships do not have to make any payments as their monthly amount is $0.
2. Benefit from Your Payments
This sounds a little strange, huh? You actually can benefit from your payments and here is how. For example, some loan service providers will allow you to make a variety of payments, but if you choose to have your monthly payment automatically taken from your bank account, you may receive a discount on your payment. This keeps money in your pocket AND you do not have to worry about sending the money off as it is already taken from your account.
You will also find that when you make higher payments above and beyond your monthly minimum, you can choose where the payment goes and it goes directly to the principal loan amount and not interest. This means that you can pay off smaller loans quickly and eliminate them from as a burden.
3. Track Your Interest
When you start to calculate how much interest you are paying on a monthly and yearly basis you will instantly be boosted into quick payment mode and you will want to pay off your student loan debt faster.
If you are paying 7.9% on your loans, then you are owing a hefty extra payment or two above and beyond what you already owe. Eliminating this student loan interest rate by paying off your loans helps.
You could attempt to lower your interest rate through student loan refinancing. If you are a qualified applicant, then you could reduce your interest rate. The smallest of changes to your interest rate can have a big impact. If you are stuck paying interest in excess of 4% you should seriously considering applying for student loan refinancing through one of our banking partners. Through refinancing, you can not only reduce your rate, but also combine your student loans resulting in one monthly payment.
4. Cut Back and Budget
Yes, it is hard. Yes, it will take some work. Yes, it can be done. You need to sit down and create a budget for yourself and also eliminate additional things that you do not NEED right now. Once your student loans are paid off, you can then start adding your additional items back into your budget, but for now, some cuts need to be made. Unless of course you want to be in debt for a long time.
It may be hard to analyze your spending, but take some time to sit down and think about how much you spend and where it goes. You will be able to quickly narrow down what you need and do not need.
5. Take a Side Job
If you have extra time on your hands, you can take a side job like blogging to help pay off student loans. If you are able to transition into your dream job, that is amazing, but most students don’t. Remember, the more money you send to your loan debt now, the quicker it will be paid off.
If you are a post grad, take some time and think about how you can start paying off your student loans. You do not want to be in debt forever.
Author: Jeff Gitlen
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