Graduating from college may be the nicest feeling in the world because all of our hard work has paid off, but we don’t realize it until later that we still have a student loan to pay back. The sums aren’t insignificant either; they can run into the thousands of dollars. Paying up your private or federal loans early will save you thousands of dollars in interest over the life of your loan. If you have high-interest debt, refinancing your student loans can help your money work harder for you.
Paying more than the minimum payment in any way you can is the most effective approach to pay off student loans quickly. The more you pay down the main sum, the less interest you’ll end up paying. So, how can you pay off your student debt faster and avoid worrying about it for years? We’ve put together a short list of suggestions to help you.
Organize
Before you start to repay your student loan, get a clear overview of what you actually need to pay, and learn about the interest rates and everything else that comes with it. Once you’re organized, it will be easier for you to pay off your student loan faster.
A student loan payoff calculator will help you figure out how increasing your monthly payments affects the overall cost of your loan (and how much interest you’ll save!). Calculate how long it will take to repay your student loans and how increasing your payments will affect the repayment date.
Refinance
Find out if it is possible to get a lower interest rate to save money. Negotiation is always a possibility. The key here is to get multiple offers from different companies as you can compare them afterwards. Once you’ve done this, you’ll be able to see which company suits you best.
Also bear in mind that government repayment programs such as income-based repayment, which can assist you avoid defaulting on federal loans, can be a lifesaver for those trying to repay their debts. Repayment plans, on the other hand, can work against you if you’re seeking to pay off your loans as quickly as possible and have the financial means to do so. It is always wise to see which repayment strategy saves you the most money.
Tax Deductions
If you have a student loan, you are almost certainly entitled for a tax deduction for interest. It’s also possible that you’ll receive tax refunds, allowing you to pay down your student loan faster. There are two forms of school-related tax deductions that can help students and recent graduates decrease their tax burden. The first is the interest on student loans tax deduction. The student loan interest tax deduction allows you to deduct up to $2,500 in taxable income for interest paid on student loans throughout the tax year.
The second is a tax deduction for tuition and fees. This, unlike the student loan interest tax deduction, is only available for tax years in which you paid for school expenditures. This is usually only a possibility while you’re in school or if you decide to return to school while paying off your student debts.
Offer to Pay More
You can pay off your debt faster each month if you use this trick. Spending less money on a regular coffee run, for example, could be a way to compensate. Examine your personal budget and see where you can cut corners for a period. You’ll discover that some of your expenses are unnecessary and may be used to pay off your student loans.
You don’t have to pay double or triple; perhaps you can manage to spend an extra $20 or $50 per month. If it’s possible, go for it! Any amount you can pay beyond the bare minimum will help you pay off your student loans faster.
Earn Extra Money
Find extra sources of income, for example a side job. There are plenty of options available, besides this side job isn’t going to be forever. The more you earn, the faster you could pay off your student loans. You’re doing it for a good cause anyway.
Keep Saving
While repaying your student debts, remember to set aside some money for yourself on the side, as you will need some savings in the future. Aside from the college loan, you have some personal finances and other priorities. Setting up automatic savings is a simple way to accomplish this.
It’s easy to talk about strategies to pay off your student debts quickly; the hard part is actually doing it. Put a strategy in place that includes monthly check-ins to keep you on track once you’ve decided which debt payment techniques make sense for your financial position. While you’ll probably have to make some short-term sacrifices to pay off your student debt sooner, once you’re debt-free, you’ll be glad you put in the extra effort (and money) to pay your loans off early.