Strategies for Paying Back Student Loans Faster.
It seems like everyone who’s out of college but not retired has student loans they are paying off. Hopefully, it won’t take you that long to pay them off but it does seem that way.
A college education is very valuable and there is no question it helps you get a better job and earn more over the course of your career. Paying off those loans, however, is hard and seems to go on forever.
Here are some ideas that could help you pay your student loans off faster than you thought possible.
…let’s talk about why you should try to pay your student loans off earlier than required. The biggest benefit? You’ll save money. Let’s say you have a $30,000 loan with a 4.5% interest rate that you pay off over 20 years — you’ll pay $15,550 in interest. But if you pay it off in only 10 years, you’ll save $8,240. If you pay it off in five years, you’ll save $11,993. That’s enough money to buy a new car. Or, depending on where you live, a full year or two of rent.
Have a Positive Mental Attitude
Achieving any goal requires determination and a feeling that you can do this — and, really, you can. Psyching yourself up about it sounds silly, but it can really help. Remind yourself what you’re paying for — a college education. That’s huge! It helps open career doors, and it helps you grow as a person. And don’t forget — college graduates have greater job opportunities and still earn more money on average.
Use a Repayment Calculator
Plug the information about your loan into a repayment calculator like the one from FinAid.org, or use your loan servicer’s online account tools. Learn how much you need to pay per month in order to pay off your loan within a specific amount of time.
See If You Qualify for Income-Based Repayment
If you have a federal loan (other than a Perkins or Parent PLUS loan), and you are on limited income, the Income-Based Repayment (IBR) plan allows you to pay based on what you earn, not on what your loan payments are supposed to be. According to the Federal Student Aid office, “Under IBR, your monthly payment amount will be 15 percent of your discretionary income, will never be more than the amount you would be required to pay under the Standard Repayment Plan, and may be less than under other repayment plans.” And, if “you repay under IBR for 25 years and meet certain other requirements, any remaining balance will be canceled.”
Get Help From Your Employer
Some employers offer assistance with your student loans as part of a benefits package.
Ask Your Employer
Some employers might be willing to include student loan repayment as part of your benefits package even if they don’t have an official program. Similar to signing bonuses and health benefits, student loan repayment is another way for employers to attract top talent. Bring up the idea to your boss and remember — this has to be a good deal for the company as well. In exchange for the student loan payment, you might offer incentives such as a promise to stay at the job for a specific period of time or agree to relocate to a branch office. – via Wise Bread
More Ideas to Help You Defeat The Student Loan Giant!
Here are some additional ideas of how to speed up your repayment of student loans without going broke! These are very practical and if you put them into practice (maybe combine more than one technique) you could find yourself out of debt sooner and without great pain in the process.
Make more than the minimum payment
Effectiveness Level: Medium-High
This is one of the easiest ways to reduce your debt. Just take the payments you have and add extra money to the payment. You should already have payments set up, so anything extra goes straight toward your principal. One easy way to do this: set up automatic payments with this extra amount added in. This takes any indecision out of the equation and makes it harder for you to change your mind too.
Consolidate and refinance
Effectiveness Level: High
Refinancing your loans is one of the best moves out there for paying off student loans faster. The goal of refinancing is to decrease interest rates, meaning more of your payments go towards paying down your student loans. When you refinance your student loans, you’ll get one consolidated loan with one monthly payment. You’ll likely just want to include loans where you can actually decrease your interest rate. For example, student loan refinancing rates below 2% are currently available. (rates vary)
Apply your raises
Effectiveness Level: High
Hopefully you work at a job where yearly raises are part of the compensation. But what do you actually do when you get a raise? For some, you might just get more stuff— a bigger TV, a better car, or more exotic vacations. While I totally think you deserve this stuff, why not put a chunk of it toward student loans?
Pay every two weeks
Effectiveness Level: Medium
Another popular extra payment strategy for student loans is to make a student loan payment every two weeks. Now, you don’t need to pay double the amount of your monthly payment to make this work. Instead, here’s the common strategy: Split your monthly payment in half. Make a payment of that amount every two weeks. By doing this, you’ll make a full extra payment over the year. The real strength of this strategy is that if you receive a paycheck bi-weekly, you shouldn’t feel the pain of paying the extra amount.
– via Student Loan Hero
Have you ever considered paying off your student loans early? Did you think it was possible?