Paying off your student loans can be a daunting task, especially if you are dealing with high interest rates and a pile of debt. It can feel impossible to make any progress on paying them down when all you see is the number increasing every month! But don’t worry, we’ve put together this guide to help you find ways to pay off your student loans faster. In this blog post, we’ll cover 10 different tips that will show you how to tackle those high-interest rate debts and get out of debt once and for all!
Refinance your loan
Refinancing your student loans can be the best way to pay them down faster, especially if you have the cash available to do so. You may be wondering if refinancing your student loans is even a possibility. Well, if you have private student loans, you can refinance them with an eligible private loan refinancer at rates which are often much lower than the current standard variable rate, even though you have less than 15 years of remaining repayment. Note: if you have federal student loans, you can only refinance them with the Department of Education. But don’t worry, your interest rates won’t change with the amount of debt you carry. For example, one of our student loan refinancing partners, SoFi, is currently offering a 7% fixed-rate loan with only 2.14% of your loan being variable.
Create a debt reduction plan
It’s no secret that getting out of debt is a lengthy and difficult process. In order to achieve long-term success, you will need a solid plan to help you get out of debt. Our next tip will help you create a solid plan for achieving long-term financial success. In a previous blog post, we’ve gone through how to create your debt reduction plan. If you don’t have a solid plan already, then take a look at our free Debt Relief Planner tool to help you build a debt reduction plan that works for you. But if you do have a solid plan, then take a look at our Debt Reduction Planner tool to help you create a plan that will help you get out of debt.
Cut back on your spending
Let’s be real, there are a lot of items that you need every day. Whether it’s a new shirt to wear or a bag to hold your latest purchase, you’ll need a few. And, you can’t just go shopping once or twice a year to replace them all. You need to save up a nice little reserve so that when you do need new clothes, you don’t have to go all out. To get started, the best place to save is in a savings account. Your bank will let you set up an automatic transfer from your checking account, which will allow you to save money every month without even thinking about it. Plus, you’ll get the added benefit of earning interest for your money while you are saving it! Make a budget One of the best things that you can do to get your finances in order is to create a budget.
Increase your income
Everyone wants a piece of that American dream, right? Many students go to college thinking that after they graduate and get a degree, everything they’ve worked for will just fall into place. In reality, that’s not the case. You can have a degree, but if you don’t have the skills to get hired, or you don’t have the money to pay the bills, then you’ll be struggling for a long time. In order to combat this, make sure you increase your income, as this can help you increase your salary and reduce your student loans faster. Tip 5 Pay attention to interest rates Interest rates are probably the most important factor when it comes to paying down student loans quickly. You can’t pay the same amount of money out each month and pay it off in the same amount of time if the interest rate is too high.
Open a retirement account
This may be the easiest of the tips to implement, and it’s the most important! Because student loans are tax-deductible (since you’re paying them off as a student), you should make sure to save as much as you can in an IRA or 401k. Even if you are a small-business owner, or simply don’t have the option of a 401k, you should consider setting up an IRA to help you reach your retirement goals. When you have paid off your loans, this account can act as a savings account, growing tax-free, and then you can use that money for your retirement! Pay your student loans on time In most cases, you have to pay your student loans on a monthly basis, but just because you don’t have the option of deferring them, doesn’t mean you should avoid them!
Negotiate with your lenders
If your student loan has interest rates in the double digits, it is possible to negotiate your payment. Contact your loan servicer to discuss ways you can reduce the payment of your loans. For example, if your interest rate is 7%, you could call your loan servicer and ask them if you can pay a little more than the regular amount each month. If they agree, you could get paid less each month and make more progress paying off your student loans faster! Track your student loans One of the best ways to reduce your loan payments is to know exactly where you stand with your student loan balance. If you have a high-interest rate student loan, you should definitely review your payments and payments made to avoid any unexpected penalties.
Consolidate your loans
A lot of people don’t realize that there are many different loans that can be consolidated together into a single loan. This will likely reduce your interest rate and monthly payments. If you’re already paying a big chunk of your income on student loans, this is a great way to pay off your debt faster! consolidation is easy If you are in desperate need of making extra cash or if you simply don’t want to continue paying the high interest rates on your loans, you should consider consolidating your loans and taking out a single loan at a lower rate. As with all loans, you need to follow all of the rules regarding terms, so you will need to meet the criteria, but it can give you a significant discount on your monthly payment.
Establish a budget
When we hear about budgeting, many of us automatically think about saving money. But a budget is much more than that! When it comes to paying down debt, you must be able to see the dollar signs. A budget is a guide that will help you find ways to save and get the most bang for your buck. By figuring out how much you need to save each month in order to pay off your debt, you’ll be able to see how much it’s going to cost you each month to repay your debt and set a realistic goal for paying it off. Track your spending If you don’t have a budget, you have no idea where your money is going! This is a big issue for those of us who have student loans. Since you won’t be getting a pay raise for a while, you must be sure that you’re going to find ways to save money each month.
Pay more than the minimum
One of the biggest challenges to paying off your student loans is how much money you have to spend each month. Unless you have some fancy/extra money, you won’t be able to pay off your student loans as fast as you might like. However, if you keep on top of your payments you may actually be able to pay off your student loans quicker if you have the funds to spare. You’ll need a certain amount of money each month, but you also need to have a certain amount left over. By spending less than you usually would, you’ll be able to pay off your student loans faster. So what do I mean by this? Well, here’s a couple of examples: Let’s say you’re in the 25% tax bracket. Let’s also say you’re making $30,000/year. You’ll need to budget $1,300 per month towards your student loans.
Negotiate with your lenders
Saving over $500 a month on your student loan payments is a big deal, especially if it frees up some cash for saving and investing. For this reason, you should start paying your student loans off before refinancing your mortgage or taking out a new credit card. Start with your first lender The first lender you’re dealing with is likely the company that issued your student loans. Even though your federal loan is the responsibility of the Department of Education, some private lenders are also involved. If you can pay your student loan off before moving on to refinancing your mortgage or taking out a new credit card, do it. Chances are, the other lenders you’ve looked at are just out for your money.