For recent or soon-to-be college graduates, how to begin paying off student loans is a hot topic. Most student loan services have a grace period, such as six months, that gives student loan borrowers time before they have to start making payments on their loans. To alleviate the burden of student debt and save on interest, there are ways to help you pay off your student loans as fast as possible. Keep reading to learn 8 quick tips for paying off your student loans quickly.
1. Create a budget
Creating a budget while in college is always a good idea, but it’s even more important once you graduate. Since you are graduating soon or have recently graduated, creating and sticking to a budget is an excellent place to start before your grace period is over. Since student loan payments will need to be made each month, it wouldn’t hurt to prioritize a large portion of your budget for your loans.
It may be difficult to budget for multiple different student loans. That is why it may be beneficial to refinance your loans, then you can create a budget to accommodate the terms of your new loan.
2. Consider student loan refinancing
One strategy that can help pay off student loans faster is to consider refinancing your student loans. Refinancing allows you to transfer one loan or consolidate multiple loans into one new account with more favorable rates.
The primary benefit of refinancing your loans is to achieve a lower interest rate. When you initially took out your student loans, your credit score and history were likely limited or nonexistent. After a few years of building credit, you may now be able to qualify for a lower interest rate. If your current loan payment is too high for your budget, refinancing can also give you the option to make lower monthly payments by extending the length of the loan.
Remember, if you decide to refinance your student loans with a private lender, you will no longer have access to federal programs. For example, individuals wouldn’t be eligible for student loan forgiveness or income-driven repayment plans. Make sure that if you decide to refinance your loans, it is the absolute right decision for you.
3. Make additional payments
One of the best ways to pay off your loans faster is by making extra payments each month. Any amount that you pay over your minimum payment will benefit you greatly. It will help shorten the length of your repayment schedule and reduce the overall amount paid in interest over the life of the loan.
Start small, such as paying an extra 10 dollars each month. Then, you can start paying more and more if it works with your income. Think of it from the perspective of how often you eat lunch at a fast-food restaurant. Instead of eating out one day, put that money towards your loan.
4. Make biweekly payments
While you may be accustomed to making one full payment for loans and other bills each month, consider making student loan payments biweekly. This may be helpful for budgeting if you also receive your paychecks on a biweekly basis.
A major benefit of making biweekly payments on your student loans is that you’ll have made an extra payment at the end of the year. Plus, it gives you the chance to split your payment up and tackle your student loan debt faster, meaning less interest paid over time.
5. Turn on automatic payments
Some loan servicers will offer interest rate discounts for those who sign up for automatic payments for their loans. While the discount may be small, it can still add up to significant savings over time. Often, the discount may be a .25% reduction on your interest rate.
Autopay is also a good idea because it decreases the chance that you’ll forget to make your monthly payment. Make sure to talk to your loan servicer about any interest rate discounts that they may offer.
6. Student loan forgiveness
In some situations, federal student loans can be forgiven, canceled, or discharged entirely. This means that the qualifying individual would no longer be required to repay a portion or the full amount of their student loans. Teachers and those who work for the government or a nonprofit may qualify. There are also programs available to those whose school has recently closed and those who are permanently disabled.
To learn more about student loan forgiveness programs and how to apply if you qualify, visit Federal Student Aid. Keep in mind that if you hold private student loans, you will not be eligible for forgiveness.
7. Inquire about employer student loan contributions
Employer student loan contribution is a benefit provided by some employers to help pay back student loans for their employees. Similar to the way an employer might offer retirement contributions, employers will choose the terms of the benefit, which may include partial, match, or full repayments to qualifying employees’ student loans.
To find out if your employer provides student loan repayment benefits, inquire within your company’s human resource department. If you are beginning your job search after graduation, always ask potential employers if this is a benefit the offer or plan to offer in the near future.
8. Make financial sacrifices
If you are trying to pay off your student loans as fast as possible, it may require you to start making financial sacrifices in your everyday life. To begin, start with unnecessary monthly purchases. For example, do you have monthly subscriptions that you could live without for a while? Think of subscription boxes or streaming services, such as Netflix.
Another option could be finding a side hustle. There are many easy ways to make money. Find something you enjoy and see what you can do. In addition, go through your belongings and sell what you don’t use anymore, or focus on meal planning instead of impulsive grocery shopping or eating out.
Do you need help managing your debt? Check out How to Manage Your Debt in 5 Easy Steps.
Trying to find strategies that will help you pay off your student loans? Visit 7 Strategies for Repaying Your College Loans to learn more!