When looking for a loan, you should keep in mind one thing – your ability to repay the debt. The faster you can pay off these debts, the freer you will become in life. And in this post, we look at ten simple ways how you can pay off the student loans faster.
- Make Minimum Payments
You should always pay the required minimum payments each month. This way, you avoid defaulting on the loan and will not have to pay any late payment charges. So, compare different loan options and apply for those which have a minimum payment amount you can afford. However, it is advisable that you do pay more than the minimum payment every month since this will reduce your debt burden faster.
- Auto Debit
The best way to make timely loan payments is by setting up the auto debit option in your bank account. Doing so will transfer a fixed amount each month at a fixed date towards the repayment of the loan. For example, you can set auto debit to transfer $200 on every 15th of the month towards loan payment. This way, you will never miss a loan payment, can avoid late payment charges, and can definitely prevent the loan from dragging out. Plus, there are loan providers who will offer you a discount in interest rate if you repay the loans by setting up the auto debit option.
If you have multiple student loans, then it may be a good idea for you to refinance it. This will replace all the multiple student loans with a single loan, which will obviously make repayment easier for you. Plus, you can also end up with a lower interest rate on the new loan.
- Employer Payments
More and more employers have started offering student loan repayment option to its employees. In such an arrangement, the companies will pay a significant portion of the student loans upfront while the employee will have to sign a contract for a fixed number of years. Some companies might not make bulk payments but will match your monthly repayment amount. It is estimated that only about 4% of companies offer this benefit.
In the US, there are professions like teaching and public service that qualifies for loan ‘forgiveness’. As the concept indicates, you will essentially be saved from having to pay the student loan in full once you are seen as being eligible for it. One of the most popular forgiveness programs is the Public Service Loan Forgiveness (PSLF). Read up and apply for it in case you qualify for the loan forgiveness.
- Volunteer At AmeriCorps
If you volunteer for AmeriCorps, you will be provided a handsome amount that can be applied towards your student loan. As per estimates, you can easily earn more than $5000 by the time your service ends.
- Cash Windfall
If you are lucky, you might end up with a cash windfall. This can come from inheriting money from a relative, winning a lottery, and so on. Whatever be the source of funds, make sure that you use it to pay for the loan. As per estimates, people tend to use up their cash windfalls within a few years after receiving it. So, instead of wasting the extra money you get on frivolous things, use it to pay off the student loans so that you can live an easier life.
- Capitalized Interest
When you stop making any payments, the interest on the loan will also end up attracting interest on it. And this is known as capitalized interest. If you have applied for forbearance, then you will essentially be letting the interest accrue and compound every month. To avoid this, you should try to make the minimum monthly payment expected from you.
- High-Interest Loans
Look at which of your student loans have higher interest rates and start paying them off as a priority. This will ensure that the biggest portion of your debt is cleared off in a quick way, only leaving you with smaller student loans that will be far easier for you to manage.
- Make More Money
Finally, the easiest way to pay off your student loans faster is by making more money. Ask for a raise from your employer or take up a part-time job. Whatever income you earn from this, apply it towards the student loan. This way, you will always be overpaying the loan every month, ensuring that the debt is paid off as soon as possible.