Paying off your student loan debt is not enjoyable.
Getting your hard-earned paycheck is one of the greatest feelings, but one of the worst feelings is knowing that you’ll have to use most of it to pay off your student loan debt.
It may seem like your student debt may last forever but there are lots of routes you can take to make your debt go away faster. You’ll just have to update your loan payment strategy. We’ve looked at all the best and most effective ways to do this. So here is our complete guide to paying off your student loans fast:
1. Make More Than Your Minimum Payment
This is a simple way of reducing your debt. All you have to do is each of the payments you have, and add extra money. You likely have payments already set up, so any extra money you pay goes directly toward your principal.
You can do this by setting up automatic loan payments with the extra monthly amount added in. This makes the process smoother and will also make it more difficult to change your mind in paying the extra amount.
And it doesn’t matter if you can only afford a small amount per month in extra payments. You can start small, and work your way up as you find yourself able to. Any extra amount will still make a difference in the long run.
2. Consolidate and Refinance
Refinancing student loans can be highly effective. It’s efficient in paying your loans off faster too. When you refinance loans, you goal is to lower the interest rates, which means that more of your payments go toward your actual loans.
If you have multiple student loans to refinance, you will end up with one consolidated loan. Therefore, you’ll only have one monthly payment. If you only have one loan, or if you just want to refinance one, you can do this for lower interest rates too. Remember, it’s really only a good option to refinance loans if it means you can decrease the interest rate.
3. Find Your Payoff Date
If you’re not sure when exactly you’ll be free of student loan debt, don’t worry. You are certainly not the only one.If you don’t know when you’ll be free of debt, start by figuring out your payoff date. Once you know this date, you can manage your debt better and work to move the date closer. This isn’t the most effective way of paying off your student loans faster, but it can still help.
To figure out your payoff date, go to the Student Loan Hero dashboard and add your student loans, adjust payments, and check due dates.
4. Pay Every Two Weeks
Another payment strategy for student loans is to make student loan payments every two weeks.
You don’t need to pay double the amount of your monthly payment to make this work. Instead, here’s the common strategy:
- Split your monthly payment in half.
- Make a payment of that amount every two weeks.
By doing this, you’ll make a full extra payment over the year. The real strength of this strategy is that if you receive a paycheck bi-weekly, you shouldn’t feel the pain of paying the extra amount.
5. Take A Job That Offers Forgiveness
There are certain jobs that exist that offer student loan debt forgiveness. These can include teaching or public service work. But in order to receive this forgiveness, you have to meet the requirements to get your student loans forgiven. In addition, you also need to complete the entire term of work before you get forgiveness.
Forgiveness programs are usually used with income-based repayment plans. This means that your payments will decrease but your interest will accumulate. It’s important to know this. If you end up ineligible for forgiveness at any time, you will end up with a large amount of accumulated interest to pay.
6. Adjust Your Budget
Oftentimes getting a raise or promotion just isn’t in the cards. So it’s important to be able to work with what you have. Decreasing your budget can help significantly in paying off your loans. And this doesn’t have to be extreme. You can adjust your budget in different areas to be able to pay your loans off faster.
You’ll find success in this in knowing that it is only for the short term. It’s not a solution that has to permanently affect your budget. By making small adjustments like moving to a more affordable place, not spending as much on happy hour or going out to eat, or cancelling cable TV, you can significantly save money. And that’s money you can put towards loan payments.
You’re in charge of your budget, so your options are only limited towards your motivation.
If it’s easier, you can do this in month-to-month increments. Dedicate one month to less money spent on entertainment, unnecessary clothing purchases, or expensive meals out. This all can add up to have a great effect on paying off your loans.
7. Apply Your Raises
If you are in a job where you are likely to move up in the company or get a raise, you are in a good spot. If you do get a raise, it’s important to consider where that extra money will actually go. If you put a portion of it toward your student loans, you’ll be able to pay them off much faster.
For example, if you put even one half of the amount of your raise toward student loan payments, you could pay them off much faster. All you have to do is either up your student loan payments. This method is highly effective if you are fortunate enough to be in the position where you receive a raise.
8. Use A Cash Windfall
Using a cash windfall to pay off your loans is helpful if it works in your specific situation. Cash windfalls can come in many forms, from an inheritance, a lawsuit or insurance claim settlement, and more.
It’s tempting to spend a chunk of money like this if you get one. In fact, according to Bankrate, around 70% of people who receive a cash windfall spend it all within a few years.
But instead of spending it on things that aren’t necessary, it’s wise to use a cash windfall on your student loans.
And even if you don’t receive a cash windfall like a settlement or inheritance, you may be one of many people to get one in the form of a tax refund.
9. Strategizing Paying Off Your Loans
It’s important to understand how your loans work. One of the first steps to paying off your loans fast is making bigger monthly payments. However, it’s also important to understand the best way to apply that money to your loans, as this can make a big difference.
A good rule of thumb in paying off student loans is to start by paying off your loans with the highest interest rates first.
The term for this is the “debt avalanche” method. In this method, you pay the minimum on each of your loans, beside the one with the highest interest rate.
Oftentimes, private loans have the highest interest rates and don’t have flexible repayment terms like federal student loans. Private loans also can have variable interest rates. This means your interest rate could increase over time. So it may be smart to consider paying off your private loans first.
When you use the “debt avalanche” method to target higher interest loans, you’ll save a significant amount of money on interest.
A similar approach is the “snowball method.” With this method, rather than paying off high interest loans first, you will pay off your loans with the lowest balances. The biggest benefit of this method is the psychological boost you will feel in completing payments on one loan.
In the long run, this method won’t save you as much on interest. But you should consider which method would motivate you the most in paying off your student loans quickly.
10. Earn Extra Cash With A Side Job
Supplementing your income with a side job can be a smart solution.
There’s hardly a limit on what you could do as a side job. You could work in freelance writing, designing, or tutoring, in person or online. You could also sell old clothes you no longer wear, house sit or pet sit, and so much more. Knowing your skills and what you can bring to the table is helpful in finding a side job.
Whatever type of job you find can help you earn extra cash quickly. You can designate those earnings toward applying them to your student loans in order to pay them down faster. You may even make connections, network, and learn new skills in the process.
11. Take Interest Rate Deductions
Cutting down on the cost of student loans with smaller savings can add up significantly. One of these savings is interest deduction from signing up for automatic payments.
Several services offer .25% interest rate deduction when you sign up for automatic payments. This, combined with other smaller savings can really add up. Seeing if your service offers this deduction is worth looking into.
What is your best option
It may seem like your student loans are never ending but there are still a few things you can do to help you pay them off faster and you can finally enjoy your hard earned money. All of these tips are great but are most effective if you combine a few of them at once. To help you figure out a plan to pay off your loan faster, check out aleevly.com. Their experts can help you come up with a plan that best fits your unique situation and can significantly cut the amount of time it would take you to pay off your student loan.