The thought of graduating can bring forth a myriad of feelings. While some worry about being able to get the right job, others are excited about finally having an opportunity to leave the kind of life that they always wanted. It is also common to constantly worry about the uncertainties that an independent life will bring.
This can further be compounded by an outstanding student loan. Luckily, you don’t have to wait until you are up to your neck in debt to start acting; you can actually adopt strategies that can see your debt go away faster. Below are tips for paying off student loans quickly.
Pay More than the Minimum Amount
You don’t have to pay just the minimum amount if you can afford more. This is a sure way of reducing your debt. You can go ahead and automate the payment with the extra amount included so that you don’t give room to the possibility of changing your mind. However little it is, it will be worthwhile in the long run.
Start Paying while still in School
If you have a part-time job or any other source of income while in school, you don’t have to wait until you graduate to start paying off your loan. The more you pay, the less you will have to pay later, in fact, you may end up clearing it all depending on how much you owe.
When you do, check with your loan servicer to ensure that your payments go toward the principal and not the interest. Federal loans have provisions for making payments while in school but private loans may require additional fees, be sure to check this before making your payments.
Take Advantage of Cash Windfalls
Have you come to some huge cash by any chance? Whether it is winning the lottery, getting an inheritance, a bonus at work, or a financial gift among others, use it as a sum payment for your loan. This is bound to make a significant reduction in your loan balance.
Research and enroll for Student Loan forgiveness programs
Certain programs such as the Public Service Loan Forgiveness Program help with forgiveness, deterrent, or funding of loans. The programs are facilitated by government agencies, non-profits, and other authorized organizations.
Such include the Peace Corps which gives you determent of Stafford, Perkins, or consolidation loans, Americorps which gives you $4,725 for working for them for a year, and Volunteers in Service to America which also gives you $4,725 for volunteering with them for 1700 hours.
Be Prepared to Sacrifice A Little Comfort
If you are going to make any significant progress, you must be prepared to do away with a little luxury and channel the savings towards your loan repayments. Some of the sacrifices that you can make include giving up or reducing your alcohol intake, cooking your own food instead of eating out, canceling cable TV, jogging instead of paying for the gym, etc.
When it comes to foregoing luxury, there is no limit to how creative and resourceful you can become, after all, you know yourself best.
Avoid Repayment Programs
As appealing as repayment programs like Pay-As-You-Earn may sound, you might want to keep off them unless you have no choice. This is because, by decreasing payments, they extend the repayment period.
Direct Loan Consolidation can also hamper your efforts to pay faster. Ideally, any extra payments should be targeted toward loans with higher interest to avoid capitalization. When loans with different interests are consolidated, you cannot make these targets.
Final Thought
Repaying student loans can be unsettling especially if you don’t have the right plan in place. On the other hand, you can pay it off sooner than you can imagine by adopting several tried and tested tactics. This requires discipline and commitment on your part and of course, being on the lookout for any other strategies that are known to work.
