While saving money is a good practice, with piled-up student loans it becomes a necessity.
Student loans can affect your budget momentum and make it further worse to pay off debt quickly.
However, you can save money on student loans by refinancing, automating, investing in a high-yielding savings account, building an emergency fund, etc. Taking out bad credit Christmas loans in the UK is also an alternative for those requiring a loan for urgent requirements.
To avoid unforeseen expenses and pay off debt quickly, read the complete article.
How to Pay Student Loans FAST?
1) Determine the total amount you owe
Are you aware of the total amount you owe as a student loan?
If not, then determine it by gathering all your student loans agreements and documents (federal or private) and analyzing the terms and conditions. Look whether you have exceeded any payment due dates or the date when you need to repay the sum.
Analyze and include these in your monthly budget. It has to be repaid timely.
You may also try spreading the payment after consulting your lender.
2) Make more than the minimum payment
Making more than the minimum payment is one of the best ways to pay off student debt quickly. Yes, even a few additional amounts can make a massive impact on your student loan liability.
According to Bankrate,“the average student loan is around £32,172 with an average interest rate of 5%. You would pay £10,140 in additional interest if you paid the minimum payment for 10 years.
Thus, making more than the actual payments can help you pay off student debt faster.
3) Consolidate and Refinance loans
Refinancing a student loan is another way to pay it off quicker. The objective of refinancing is to reduce the interest rate.
When you refinance student loan debt, you get multiple loans with loan consolidation.
It involves paying a fixed amount once a month.
The goal of refinancing is to give more financial freedom and control over debts and to pay off debt quickly. Refinancing your loan requires that you meet the following requirements:
- Credit score over 600
- A steady income sources
If you disqualify on both, you will need a co-signer who qualifies on both.
For refinancing to make sense, ensure that you qualify on credit score and income. Refinance with a company that offers better flexibility and better interest rates.
4) Make bi-weekly payments
Split your payments into halves every 2 weeks. You can even make a half payment every time you receive a paycheck in hand. Decide 2 months where you will have to make extra payments.
And guess what?
Depending upon your total payment amount, you could save thousands in interest from these two extra-half payments!
Consult your creditor to determine how many payments you need to make in these 2 weeks. In this way, you will save interest and pay off debt quickly.
5) Utilize Loan Forgiveness Programs to your benefit
Complete reimbursement of the student loan is the fastest way to pay it. For example, Public Service Loan forgiveness is for someone who works in public service.
For example, if you work as a teacher, you can reimburse your amount after 3-5 years of service. Likewise, if you work in a similar profession for the Govt. Or non-profit, you may qualify for loan reimbursement.
6) Cut on unnecessary or luxurious expenses
Having a budget helps you determine your wants and needs. It helps you analyze where you need to invest money and where to spend it. Before buying anything, decide whether it is a want or a need? Is this expenditure really important?
Some expenditures include- student fees, bills, etc.
Try the “shopping ban” technique and buy only essentials.
It will surely help you save enough to pay off your student loans gradually and effectively.
7) Choose your Repayment Plan Carefully
In terms of federal student loans, the standard payment term is 10 years. But if you opt for an income-optimized repayment plan, your repayment plan will last about 20 years.
You can switch to an income-optimized repayment plan if you cannot pay the standard loan amount.
Or else, as mentioned above, you can refinance your loans by consolidation for a single interest rate and pay a fixed amount every month.
Paying your student federal loans this way might reduce the flexibility you get with the income-driven repayment option.
Last, choose the mode of repayment that suits your budget and payment habit.
8) Develop a strategy around your debt
For paying your student loan debt quickly, consider paying off the high-interest loans first. Switch to the debt avalanche method, where you pay just the minimal amount but the student loan with the highest interest rate.
Instead of going for federal student loans, which are Govt, student loans that allow students and parents to borrow money for college directly from the federal government consider private loans first. Private student loans are issued by institutions and private organizations like banks. However, they don’t offer the exact flexibility and favorable terms as a federal loan.
These loans share variable interest rates, which means your savings on interest will escalate.
Or else, you can try the “snowball” method whereby you pay off the loans with the lowest balance first.
Thus, choose the ideal method according to your repayment capacity and the pending loan amount.
9) Maximize investments
Apart from making minimum monthly payments on your student loans, you can use the interest gained creatively. How?
Investing and building your portfolio. Profitable investments make life easier and help reduce liabilities quickly.
There are multiple ways to invest and save money:
- Real Estate
- Exchange-traded funds
- Traditional or IRA
- Index funds
You can consider these to multiply your wealth and build concrete investments that offer you profitable rewards in the future.
10) Utilize Student Loans interest rates deductions
Specifically, if you are seeking some big wins on the way to paying off your student debt, this is the best method – signing off the interest rate with automatic payments as a tax deduction.
By setting automatic payments settings, you will never miss out on payments. Apart from that, automatic payments will help you save on the loans, combined with other strategies on the list.
11) Seek a side hustle
When you have bills to pay, and loan payments to make, and alone income won’t help you in the long run. It will only exceed the loan repayment term and the interest rates as well. Thus, to avoid late or delayed repayments, seek a side hustle.
If you can talk out with your employer regarding the salary increment terms, that’s good. But if not, then seeking aside hustle is the only option.
Apart from a regular income, you can seek a part-time opportunity for something you excel at. You can start off as a freelancer, online classes teacher, affiliate marketer, etc. To build a side income and pay off your debts quickly.
It will help you reduce the burden as well.
12) Don’t rely completely on Student loan forgiveness
Though it may give you jitters, it’s true. Getting bowled over by the idea of taking students’ loans and forgiving later is too good to be true. There are multiple requirements that you need to fulfill to get through the loan forgiveness and this does not happen with everyone having student loans.
Yes, the forgiveness thing isn’t guaranteed.
Govt. Assistance supports to an extent and after that, you pay it on your own.
Thus, if you have a job that pays well and a side gig to support your additional expenses, you may apply for student loans.
Relying solely on government grants and loan reimbursement or forgiveness won’t help long. Thus, be backed by a concrete budget strategy and finances for paying off the student debt.
13) Pay in grace period
Grace period is six months after graduation. While it may not sound appealing initially, it helps keep the interest in check and prevents your balance from exceeding. It is advisable to start earlier and finish at the earliest. Pay off debt quickly!
14) Awareness: Student loans aren’t a “good debt”
You must have heard the buzz words- “good debt” and “bad debt”
While students’ loans are an excellent investment if you have a good income base and supported extra income, they aren’t a good debt either.
If you keep it for long, interest charges may trap you in hard-to-get rid of things. So, it is important to figure out the right way to pay off your student loans. Just declaring them as a good debt to drag repayment for later isn’t a good idea.
15) Stay motivated and pay your student loans quickly
Although it is a simple decision, dragging student loans for a term of 10 10-15 years is wasteful. Plan your budget and take quick loans online for repaying the debt you owe.
Apart from this, making more than the minimum payment, refinancing, and considering grants for student loan forgiveness may help you manage student loans wisely and become debt-free.