Frequently students graduate with significant loan debt. This leaves students with no choice but to pay it if they want to move forward in life with a good job. However, one can take some smart steps to pay off student loans even faster. Naturally, this challenge is easier said than done, but here are some tips on how to do so.
Making the Most Out of One’s Income
If working, take advantage of any opportunity for extra money. When getting a raise at work or winning the lottery, use that money to quickly pay down the student loan.
Alternatively, consider refinancing loans to pay them off faster. Refinancing student loans can help shave years off the repayment period. And while it may seem counterintuitive, refinancing can help people struggling to make their monthly payments. By taking out a new loan at an interest rate that’s lower than what one has been paying previously, one will end up saving money over time — and be able to pay off the old loans sooner as a result.
Research Loan Forgiveness or Cancellation Programs
If one qualifies for a student loan forgiveness program or cancellation program, this is a great option that could benefit the person substantially. To be eligible for these programs, someone has to be working in specific areas such as teaching or nursing.
These programs often require a person to meet specific requirements, such as making particular payments over a specific time before considering forgiving all remaining debt. These programs can help people get out of their student debt.
Tackling the Small Stuff
Before doing anything else, a person should be on the right repayment plan for their situation. The standard repayment plan does not always result in the fastest payoff and sometimes even results in a higher total amount paid due to interest accruing over time. Look into an income-driven repayment plan, which will cap your monthly payments at a percentage of what a person earns, depending on one’s financial situation.
Pay the Highest Interest Rate Loans First
When trying to determine which student loans to pay off first, it makes sense to focus on the one with the highest interest rate first. A person is likely to save money by paying off this loan first and then using that money towards another loan with the next highest interest rate and so on until all of the loans are paid off. This is an excellent way for those with multiple loans to pay them off quickly.
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