How to Pay Off Student Loans Faster Early in a Year
How do I pay off my student loan debt? With student loans now clocking over a trillion dollars, a significant number of students in the United States shoulder huge financial burdens which they have to pay on finishing their studies.
This has created a situation where people start off their working lives paying debts accumulated during their years in school. On average, a debtor student owes over $37,000! This huge debt burden must be paid by the student.
But how can the loans be paid off? Are there strategies to adopt? Is there any form of government support? These among several other questions will be answered in this article, as it sheds light on the paying off of student’s loans early.
This is most important for grads starting their new careers with a huge debt burden to settle. Some of the strategies to adopt in paying off loans include the following;
Smartest Ways to Repay Your College Loans Fast – Calculator
Do Not Wait!
This is a very crucial point to take not of. Usually, borrowers are given a buffer period termed the “period of grace.” This period typically lasts for up to 6 months. This should not be taken lightly. It might look like a friendly policy, but in the end, it bites hard through the continuous accumulation of interests on the loan itself. However, for those grads without a job, this can be used to their advantage.
For grads that are able to secure new jobs, it is advisable that the loan repayment process should commence immediately. Paying the loans in agreed instalments greatly reduces the chances of having unwanted accumulated interests that will contribute to the payment burden significantly. Starting the repayment process early ensures that total repayment is achieved relatively early.
Speed Up the Payment Process
This is also a good strategy to use in paying off student loans. With an accumulated debt profile that slowly increases in interests over the period of time the loan was activated and remains unpaid, paying extra, no matter how small will definitely speed up the payment process.
In the event that you have a bonus or any windfall of financial benefits, increasing the loan repayment through an added percentage will be wise.
This prepayment method significantly reduces the loan tenure. With this strategy, paying off the loan within a considerable time limit helps the individual refocus his/her attention to other important areas that may include investments, and payment for mortgage plus saving up for retirement among other important post loan repayment activities.
Introduce Cost-Cutting Measures
These are drastic measures that ensure that living expenses are greatly minimized to the most essential things. Indulging in luxuries are cut off to save cost, thereby improving your financial status.
Some of these expenses that could be reduced might include sharing an accommodation to reduce the rent implications. Also, staying with relatives will not be a bad idea as it will help in reducing costs that will delay the repayment of these loans.
Having more than one care or an expensive car will not be a great idea if a student has debts to pay. An expensive car can be sold off for a cheaper and less expensive one. The extra money realized can be added to the repayment of the loan. Reducing phone bills should be an important area to work on.
Doing this can save you a lot of expenses that can be contributed to loan repayment. These should be considered as sacrifices that are necessary and help in realizing the objective of promptly paying off students loans to avoid the build-up of interests over time.
Develop a Goal Setting Strategy – Student Loan Repayment Plan
This strategy can be adopted for the repayment of student loans, as it charts the way and the procedure to follow. It gives the student a clearer vision of steps to take. With a goal in mind, the amount of loan collected and the sources of these loans can be included to ensure that the student never misses the payment of any loans that might come back to hurt (through increased/accrued interests).
Have a Total Debt Repayment Timeline
This is also related to having a goal. It sets a timeline where this process should end. Having a debt repayment timeline/timeframe ensures that this debt is split into several components, each payable at certain periods of time.
If you can surpass this goal, it will be a welcome idea, but it should be ensured that this timeline is not skipped by a single month. Sticking to this will help you realise your goal faster than you can imagine.
Think About Opening a Dedicated Account for this Purpose
Creating a dedicated savings account for paying off students is very necessary. Using other savings accounts opened prior to the loan repayment process will likely affect an uninterrupted savings. Using the money for other activities is likely to be the case.
Consider Debt Forgiveness
This is an option that should be strongly considered. But this is only possible if the student is involved in public service work such as teaching in certain schools, and taking part in community services. In some cases, the loans are totally forgiven, while in other cases, a substantial part of the debt is waived off.
This article has provided some strategies that can be employed in paying off students loans. These strategies are sound and can significantly impact on fast settlement of students loans.