6 steps to paying off your student loans
Updated on November 6, 2020
Student loan debt is an ongoing crisis in the US as the outstanding debt has surpassed $1.5trillion. Despite the government putting in place measures such as student loan forgiveness and affordable, long-term repayment plans, many graduates still struggle to pay off their student loans.
However, with the right strategies, you can pay off your student loans early. Here are six steps to paying off your student debt fast.
1. Make more than the minimum payment
The easiest way to pay down your debt quickly is to pay more than the minimum monthly payment, but only if your budget allows it. Just ensure your lender is applying the extra payment to your principal and not putting it towards your next month’s bill.
2. Work towards student loan forgiveness
If you have a federal student loan and work in public service, you’re eligible for student loan forgiveness (the lender forgives the remainder of your student loan debt). However, this only applies when you make 120 on-time and consistent payments.
3. Stick to the standard repayment plan
This plan requires you to pay a fixed monthly amount for ten years. It’s the best option for graduates that want to pay off their loans quickly as it doesn’t accrue interest over time. Therefore, while you may pay a higher amount each month, you’ll end up paying less in the long run than if you opted for the income-driven repayment plans.
4. Make lump-sum payments when you have extra cash
It can be tempting to spend your yearly bonus or tax refund on new clothes or a trip. But you’re better off paying your student loan debt with the extra cash.
5. Consolidate or refinance your student loans
Consolidating your federal student loans into one single loan lowers your monthly payments and extends the term of your loan. By consolidating your loans, you can also qualify for student loan forgiveness.
6. Create a budget
Setting up a budget limits your spending so that you have extra money to put towards your student loans. Ensure you set up a realistic budget that allows you to save while paying off your debt.
Contact StudentLoanify today to learn how to pay student loans.