If you are trying to pay off your student loans, you are not alone. As of 2018, there was a total of $1.5 trillion student loan debts.
This is an all-time high, and thanks to the constant rise of new debtors and compound interest, this amount will keep on rising. According to statistics the amount of student loans grows at the rate of
$ 2,726 per second.
Unless something drastic is done, such as the government intervention or the shutdown of some universities and colleges, this is a bubble that will keep bubbling without an end in sight.
The cost of college also continues to rise, and therefore the debt will also keep growing. Unfortunately, the stagnation of wages for a majority of US employees is making it impossible for these loans to be paid back, and this seems to be a hopeless endeavor.
Now, if you have taken out a student loan, don’t worry, there are ways of paying it back painlessly, and efficiently.
In this article, we shall show you simple ways of paying off your student loans while still in college or immediately after graduating. These methods will help you become financially stable as a result of ensuring that you are debt free.
Let's get it started!
There are many strategies you can adapt to pay off your student loans. Remember that a majority of Americans pay off these loans for most of their lives, and they may even end up reaching the age of retirement without ever clearing their loans. This should not be the case.
Try some of the following methods to clear your debt;
Prolonging your student life for a while
We all know how the life of a student is. It involves minimal expenses, lots of opportunities to save money and of course plenty of time spent at home as you do not have money to go out often.
This is the life we are talking about.
Graduating from college is a big deal, and you should celebrate this significant achievement, but it is essential to keep it simple. This is not the time to pop open the champagne bottles and host big extravagant parties. Keep it simple. Remember you are in debt.
Avoid big and unnecessary purchases for about one or two years immediately after graduation, and instead, allocate some of your earnings towards paying off your loan.
If you continue living the poor lifestyle of a student, you may be able to budget your new salary to accommodate paying off your debt.
Now, in addition to your student loan, you may also be able to start saving for your future. So, if you have roommates, keep them, if you have been managing to get by on Ramen, keep this up, and soon you shall live the life you have always wanted to live.
The Debt-snowball method
This loan repayment technique will help you roll the debt away. Here is how it works;
Create a list of all your loans, starting from the least balance to the greatest balance.
Month by month, you shall be allocating your savings towards the smaller balances little by little, and for the big loans, pay the minimum only.
As the smaller loans wither away, you shall be left with fewer loans and less debt.
This method is great because it helps you pay off all of your other loans as well, not just the student loans, because you are supposed to list all of the loans you owe, not just the student loans.
Take on a side job
If you want to pay your debts off quickly, then you should consider taking on another job so you can earn some more money. The key is always to ensure that any extra money you have is used to pay off your debts rather than wasting it elsewhere.
There are plenty of jobs you can take on as a fresh graduate that can earn you some money such as tutoring, working at a late-night pharmacy, etc., but this will depend on the job you are holding currently. If you have some extra time, then take on another job, but ensure not to mess up your job.
Refinance your high-interest loans
Refinancing may not be ideal for all situations, but it is a great idea for someone with lots of loans at high interest rates. You must, however, be extra careful when deciding to refinance your loans, and adequate research is key here.
Visit as many credit providers as possible, to find one that will refinance your loans at the lowest interest. This will save you a whole lot of money, that you can save.
There are however some pitfalls to watch out for when it comes to refinancing loans; e.g., if you do refinance your federal loan using a private lender, you shall lose out on some federal perks such as deferment, forbearance, and income-based payment.
You will also have to ensure that you are getting a better interest rate when you refinance; however, it is just not worth it.
Paying off your loans while still in school:
If you are still in school and are making some money already, its never too late to start paying off your debts. You can start preparing yourself to come up with a plan on how to repay your first student loan because whether you like it or not, you will still have to pay it off, so, the earlier you start, the better for you.
The reason why it is a good idea to start repaying while in school is that, many student loans normally accrue interest while you are in school, and once you graduate, you will have a very big loan in your hands.
By making small payments on your loans, you will diminish the total loan, and even the cumulative interest as well.
Also read: A guide to Credit Score for College Students
Try and make more than one payment a month:
If you are looking for a way to pay off your student loans quickly and hassle-free, then, making more than one payment per month would be a good approach.
You can even start making bi-weekly payments according to your payday.
You can also decide to make monthly payments. Whichever one you choose will depend on you. But as long as you are making payments, then, rest assured that your loan amount is decreasing by the day, and in the end, you will be able to manage the repayment.
Remember that; by making extra payments on the loan, you can even be able to reduce the principal amount, which in turn reduces the interest payable. This is because the interest to be paid on loan depends on the principal amount.
You could make lots of savings by decreasing the principal payment.
Paying more than the minimal
Every loan has a minimal amount repayable to ensure that it desn’t run into arrears. This is what you should pay either per month or per week, depending on the agreement you have with your lender.
If you want to clear your student loan quickly, then, a good way of doing it is to make more than the minimum payments during each repayment period.
This will see your debt reduce quickly.
But you may be wondering how can this be done?
It is very easy to organize your finances if you think about it critically, you more often than not have more than you need. That extra money you are making in the form of tips at your local job, or the little pocket money your grandma gave you, can all be allocated towards reducing your student loan and making your life much easier.
Enrolling for an automatic repayment system
Most student loan officers will offer you a paperless repayment system that will eliminate the need to write a check. This helps you not think about the money as much as you would when you see it written down on paper. It takes away the emotional attachment of a check.
What they do is to auto-debit your checking account on specific dates, and they may even offer you discounts when you sign up for this paperless repayment method. These programs make it very easy for you to stay up to date with your debts and eliminate the chances of late payments which can attract penalties.
You can, however, make extra payments manually if you want to. They do not have a limit.
Ask for help
This should be your last resort, but if you have someone that can help you out then, it would be wise to as for their help.
What we are talking about is; You can ask your boss to help you pay for your student loan. It isn’t unheard of; in fact, it has been done before.
Some government offices and other types of industries normally have this plan in place, and you can receive up to $10,000 to kickstart your loan repayment. Now, imagine receiving such an amount from your employer, when you have already been repaying! It would drastically reduce any loan amount that could be outstanding.
Other professions with similar programs are nurses and teachers. This is done through the teach for America and Nursing loan repayment programs under the AmeriCorps.
If you get a job with the public sector, you can also get help with your student loan when you apply for the Public Service Loan Forgiveness Program.
There are very many options, and even the Federal Government will forgive your loan if you have made over 120 payments. This is if you are employed in the public sector.
The bottom line is that the student loan levels keep rising year after year, and this will not change anytime soon, and therefore if you love your country, you need to take responsibility of your debt and become financially independent.
Having too many loans will not only weigh you down but also limit your chances of taking out additional loans.
As the years go by, you will require a car loan, a mortgage, a business loan, etc. If after 15 or 20 years you are still being weighed down by your student loans this will not reflect very well on you, and neither will the lenders be willing to finance you.
Take responsibility for your finances while still young, so you can be free of loan repayment obligations later on in life.