How to Pay off Student Loans Smarter (And Faster)
Have you ever felt like you’ll be repaying student loans your entire life? You’re not alone. Racking up student loan debt can seem like the end of the world, but there are many manageable ways to chip away at your debt. With these tips, you can work toward paying off your student loans faster.
Refinance Your Student Loans to Save
Refinancing is an option everyone should look into as it is one of the most effective ways to save money on loans and pay them off quicker without breaking your budget.
When you refinance your student loans, you may get a lower interest rate, which would mean paying less interest. In some cases, paying less interest can mean you pay thousands less in interest charges over the life of the loan.
Iowa Student Loan provides a simple and very quick way to find out the rate you would qualify for without impacting your credit score. And, if you have someone with good credit who is willing to cosign a refinancing loan with you, you may qualify for an even better rate, saving you even more in interest charges.
Pay More than Your Minimum Student Loan Payment
One of the most effective ways to pay your student loans off quicker is to pay extra money each month. Paying your minimum required amount might be enough to keep you in good standing but that means it will still take you the entire repayment term to get out of debt.
Adding just a little extra money each month can make a huge difference, and if you have the disposable income to pay an additional amount each month you’ll save money on interest and time in repayment.
Make Additional Student Loan Payments Throughout the Year
If putting extra money toward your student loans each month is unattainable, you can instead make a few extra payments throughout the year. This is a great place to start if you’re still trying to figure out just how much you have left over in your budget each month. Set a goal to make an extra payment once every three or six months and slowly reduce your student loan debt.
Make Some Extra Money to Put Toward Student Loans
If you feel like you don’t have enough income to contribute extra to your student loan payments, consider getting a part-time job to help with your budget. The best kind of part-time job is one where you get to do something you enjoy. For some people that means taking up tutoring, babysitting or music lessons. Others prefer to work at a restaurant or get a job at the mall (did somebody say discount?). Find something that works well with your lifestyle and schedule.
Just remember to make a plan to manage your money. Come up with a schedule for saving money or putting it directly toward the balance of a loan as you reach a certain amount. It can be too easy to spend money that is designated for loans if it’s just sitting around, so make sure you develop a good system for accountability.
Creative Ways to Make Extra Money
If you don’t want to commit to a part-time job, try a more creative way to make money. Driving for Uber or Lyft allows you to earn some extra cash on your own time, without an ongoing commitment. Or, you may be able to find freelancing work on different websites that fit with your skills. These are just a few of the more unique ways to make extra money to put toward your student loans debt.
See if Loan Forgiveness Is an Option
Loan forgiveness is not necessarily too good to be true! Not all people are eligible for this benefit, but some careers are eligible for loan forgiveness. And if you’re eligible, loan forgiveness can save you thousands of dollars.
The federal government offers several loan forgiveness programs depending on your career and types of debt. Be sure to use a reputable source for information on federal student loan forgiveness programs, like the Federal Student Aid website.
Many states also offer loan forgiveness programs for teachers, nurses and workers in other high-demand but lower paying fields. Be sure to check out what the state you live in offers as far as loan forgiveness programs. Another source is the financial aid office at the college or university you attended; as those experts can help you find loan forgiveness or grant programs.
Don’t Blow Raises and Bonuses
Everyone loves getting a bonus or raise at work. You can put this money to good use by paying off your student loans. If you receive an unexpected bonus or raise and are not relying on the money for anything specific, put it directly toward the balance on your loans. These can really help to reduce your debt and won’t even break the bank.
Budget to Save Money in Other Areas
Not sure how people manage to have left over money after bills, loans and fun? You should try out budgeting! Budgeting is great because it establishes boundaries for your spending and helps you keep track of where your money is going. When you’re not tracking your spending, you might not even realize just how much you’re spending on silly things.
Once you’re actively managing your spending, you’re more accountable and you’ll likely find you have more money to spend — money that you can put toward paying off loans, saving or investing. Making small changes is the best place to start. Consider cooking more at home to save on eating out, making coffee at home instead of stopping on your way to work or renting a movie instead of seeing one in the theater. This monthly budget calculator can help you get started.
Tips to Chip Away at Debt
Remember these tips to work toward paying off your student loans faster:
- Consider refinancing your existing student loans. See if you pre-qualify today.
- Pay more than the required minimum monthly payment amount.
- Make additional student loan payments when you can.
- Put any extra earnings or bonuses toward student loans.
Get creative! With a little bit of effort your student loans will be gone before you know it.