Specifically ask to avoid "Paid Ahead" status to ensure that your progress isn't slowed down. Ask your employer to pay off your student loan. It can save up to thousands of dollars in potentially high interest. Here is a visual representation of the SLS Indicator:. Luckily, you're an intelligent person, and now you have the diploma to prove it. Most private refinance lenders require a minimum FICO score of We may receive compensation if you apply or shop through links in our content.
Oct 12, · This might happen automatically, but it's best to call your loan servicer to make sure. 2. Know which loans you should make prepayments on. If you have federal student loans, you're allowed to make pre-payments while in school. But if you have private loans, there's a chance you could be hit with a fee for making payments early. . Choose whichever method will motivate you to keep going in your goal of paying off student loans faster. Take interest rate reductions. Effectiveness Level: Low. While you can cut down on the cost of your student loans and get some big wins with the strategies above, smaller savings can add up, too. Refinancing your student loans is just like refinancing your car or home. You turn in your old loans for a new one with a new, hopefully lower, interest rate. This also is a good way to pay off student loans faster. Only private lenders offer refinancing, as of now, but you can refinance and consolidate both federal and private student loans.
After all, the interest rates on variable private loans given by banks and credit unions are currently lower than the fixed rates on federally backed and private loans. But historically this situation is unusual, and if the economy improves, interest hikes are probable in the near future.
If you can, pay twice the required amount until you have eliminated this debt and make only the minimum monthly contribution toward your fixed-rate federal loans, since those rates cannot increase. Choose the right federal-student-loan repayment plan. So which schedule is best for you?
Aim to put 10 percent of your gross that is, pretax income toward your education debt. Ask your employer to pay off your student loan. A little-known way to eliminate college debt is to appeal to your boss for a compensation package. Be willing to take a lower salary and to commit to staying at the job for a specific time period in exchange for a payment toward your schooling.
As part of my compensation, can you put [insert amount] toward my loan? Earned a diploma since then? This will help you make a plan. Use this Student Loan Repayment Estimator to figure out where you stand.
Read on to learn about 24 things you can do to say goodbye to your debt sooner. We split the information up by type of loan , but many tips apply to both, so make sure to read everything. Federal loans make up the bulk of student loan debt in the U. Don't wait to pay. Federal student loan borrowers are typically granted a grace period before their first payment is due, during which time no interest accrues on your subsidized loans. It may be tempting to not pay anything at this time especially if you're just getting your footing in an entry level job.
Are you temporarily struggling with federal student loan payments? Keep in mind that the federal government does not want you to default on payments. There are multiple options such as forbearance, deferment and a slew of repayment options. Forbearances can be used in times of hardship. Deferments are meant to be used when you suffer from a job loss or are still attending school.
Be wary of repayment plans. Income-based repayment plans IBR were introduced to offer relief to cash-strapped students who couldn't afford to pay under the standard year plan. These plans lower your monthly payment, but lengthen your repayment term. And our goal here is to pay off the loan fast. If you do require an income driven repayment plan there are several options available to you. Log in to your student loan servicers website or the Department of Education submit your current income and family size and it will provide you with a new low repayment option.
Consider this only if you are having trouble making the minimum payments. Otherwise, it's much better to save and find extra money to pay off the loan as fast as possible. Consider a career in public service. Under the public service loan forgiveness program , any remaining balance you owe would be canceled after you've made 10 years' worth of payments. This can be a major plus if you borrowed heavily to complete your education. Also consider working for a service program that offers loan forgiveness or an education grant.
Programs under the Americorps umbrella will often offer an education grant in exchange for years of service. Check out this full list of grants that can also help you take care of those loans. Make your monthly payments automatic. Opting to have your monthly student loan payments drafted right out of your bank account is an easy way to reduce what you're paying in interest and get out of debt faster.
Many loan servicers offer a 0. Pay before the due date. Your federal loan servicer will assign you a specific due date each month, but getting your payment in earlier can work to your advantage. The interest on your federal student loans are calculated daily. Making your payments ahead of the due date reduces the principal faster and cuts the amount of interest you're being charged, so you're not stuck paying as long. You can use the repayment estimate calculator to view how much you can expect to pay back.
While you are taking classes any payments that you make on your subsidized loans will apply directly to principal. As an undergrad swapping a daily coffee for a payment on your loans can save you hundreds on interest over their lifetime.
Repaying your loans early will not only help cut down on interest and reduce payments, but can help you save up for and purchase your first home.
Opt for biweekly payments. Splitting your monthly loan payment in two is another easy strategy for eliminating the debt more quickly. Consolidate to a lower rate. If you're juggling multiple federal loans, consolidating them will take them and combine them into one new loan. This can streamline your monthly payments and potentially lower your interest rate. Rates are fixed for the life of the loan, and you still have the option of going with an income-based repayment plan if you need to.
There are pros and cons with this process, so make sure to do your research to see if this is the best option for you. Keep in mind the difference between variable and fixed interest rates. Knowing your rate and knowing how much accrues daily can ultimately save you money on the long run.
A fixed rate will remain the same and a variable rate will change depending on the current market. Of course, both will change if you apply for a consolidation or loan refinancing.
Get tuition assistance from your employer. Many private companies offer tuition assistance or reimbursement to employees who are either attending grad school or have earned their degree.
The federal government also sponsors loan reimbursement programs for teachers and nurses who work in underserved communities. When you've maxed out your federal student loan eligibility, turning to a private lender may be the only way to finance your degree.
Unfortunately, private loans typically lack the low interest rates and range of repayment options that federal borrowers enjoy. Start with the most expensive loans first. Therefore, it's a good idea to target the private loans over federal loans. Getting the smallest loan balance out of the way first can give you a sense of accomplishment, but paying down the one with the highest interest first will ultimately save you the most money in the long run.
Once that first loan is paid off, roll over the payment amount to the next loan with the second highest interest. Refinance with a different lender. If you're carrying higher rates on your private student loans, refinancing them with a different lender can lower your interest rate. There are both fixed and variable rate loan options available with rates as low as 2. Having multiple loans with different interest rates is a major headache. What if you just had one loan at one rate?
Refinancing can consolidate your loans into one easy payment. Shop lenders at Credible. When refinancing your private loans isn't an option, you can shift some of the balance to a zero-interest credit card. Keep in mind there are also credit cards geared directly at college students, read here to find out more.
Taking advantage of this can give you a breather from higher interest rates. But before you take this action, make sure you have a plan in place to pay off the balance before the promotional period ends.
Otherwise, you will be stuck with an interest even higher than that of student loans. Bump up your payments incrementally. Paying more than the minimum each month is the easiest way to get out of debt faster. But we know it's not always possible to add on a big chunk of change to your payments. As you earn more at work or trim your budget in other areas, slowly start to put more in the extra payments.
Make sure payments are applied correctly. Paying extra on your private loans won't speed up your debt payoff if your lender doesn't allocate the money correctly.
Pay very careful attention to this. Instead of applying it to the principal, your lender may credit it towards your next month's payment , which won't do much to reduce your interest or make a dent in the balance.
Specifically ask to avoid "Paid Ahead" status to ensure that your progress isn't slowed down. If you borrowed heavily from private lenders, relocating to a cheaper city can make managing your payments easier.
Some places even offer additional incentives to entice new grads. Places like parts of Kansas and Detroit , for example, have programs that provide loan reimbursement for borrowers who are willing to pick up their roots and try out a new city. Digging your way out of student loan debt becomes a lot easier if you're willing to consider some creative solutions beyond just the basic repayment options.
Use your credit card rewards. Reward points and cash back are good for more than just shopping or travel. You can also use them to pay off your student loan debt. For example, the Citi ThankYou Preferred Card allows you to convert their reward points into a student loan rebate voucher to make an extra payment.
Put windfalls to work. If you received a tax refund , slapping it down on your student loan is the smarter option than spending it on a shopping spree. Imagine how much faster you will pay off your loans if you do this every year. Consider a career in the military.
Military service offers an incredible number of benefits, the most important of which is the opportunity to serve your country in an invaluable way. Alongside that honor, you can also receive a number of loan repayment or education sponsorship benefits. You have to meet a number of requirements, but once you have filled them, you have access a number of different military loan repayment programs.
Final note here, do make sure to do plenty of research before making this major life decision. Find areas where you can cut down on costs. Trimming your budget is one of the most effective ways of clearing up extra cash to use towards student loan payments. This is not as hard as most people think. Try out a budgeting app like Mint to see where your money is going each month.
Is your high rent eating up a good portion of your paychecks? Consider shacking up with a roommate or two. Food costs can also be cut drastically by cooking your meals and bringing your lunch to work. Cancel any "luxury" unnecessary items such as cable TV, gym membership, or daily Starbucks runs. Really, the options are endless. If you don't mind moving back in with the parents after graduation for just a short while, you can make serious headway in paying off your student loans.
Your parents would also have to be on board and keep you accountable. The trick is to use what you would have spent on rent and bills on your student loans.