After you earn your college degree and land your first job, paying off your student loans takes precedence. Your capacity to buy your first house may be threatened by the debt, which can reduce your available income.
The most difficult aspect of student loan debt is navigating all of the available options, programs, and plans. Choose a repayment strategy that works for you, look into debt forgiveness possibilities for which you could be eligible, and be aware of your options in case you find it difficult to make your monthly payment on time.
Here are some of the best strategies for reducing your student loan debt after graduation once you’ve established the baseline.
Pay additional amounts
Student loan payments are due once each month, but if you make more payments or split your payments into two each month, you may be able to pay off your debt more quickly by lowering the amount of interest that accumulates.
Bi-weekly payments result in an additional payment each year that lowers your principal debt (and the interest you’ll eventually pay on it) by a small amount. By making this payment, you can cut years off of your loan.
Split or bi-monthly payments may also shorten the amount of time it takes to pay off your debt because they minimize the principal sum on which interest is charged. Nevertheless, you won’t save as much.
Make sure your lender accepts split payments and will send money right away in either scenario. If your interest is computed daily or based on the typical daily balance each month, you’ll save the most money.
Be mindful of the type of student loan debt you have to settle. Compared to federal student loans, private student loans may have higher interest rates and fewer alternatives for simple repayment. To quickly eliminate your student loan debt, pay off your private student loans first.
Set it to automatic
Your credit score will appreciate you for making automated payments as soon as you get paid (assuming you get paid biweekly), and you’ll have one less thing to worry about.
Here’s a freebie. You might save money if you use automated payments. Several student loan servicers give borrowers who enroll in autopay a 0.25% interest rate discount on federal student loans.
Pay more than the required amount for even quicker results. Make sure to get in touch with your loan servicer to confirm that the surplus is applied to the principle.
Work for a company that provides assistance with repaying student loans
Employers are adopting student loan repayment aid as an employee benefit at an increasing rate. In contrast to tuition reimbursement, which pays you to attend school, these programs will pay off your student loans only for working at the company.
The sums range from as little as $500 annually to $10,000 annually. Check out this post on employers who offer help with student loan repayment for a current list of employers.
Volunteer and give back with your time.
Numerous companies will pay back your college loans in exchange for your time and expertise on charitable projects. This business strategy has been embraced by companies like SponsorChange. To be eligible for debt repayment help, you must follow their rules and successfully finish the program in accordance with their standards.
To work and reside abroad
Living and working abroad can save you money on taxes and give you extra money to put toward your student loan debt. You might not be required to pay federal income taxes if you work abroad. The maximum amount of foreign earned income exclusion for 2016 was $101,300.
Refinance and Combine Your Student Debt
A fantastic way to pay off your student debts quickly is to refinance them. Your main objective should be to lower interest payments so that the majority of your payments go toward principal reduction rather than interest, which will minimize interest.
You can combine various student loans into a single loan with a single monthly payment when you refinance your debt. Include student loans with the highest interest rates to have the biggest financial impact.
The best interest rates will be provided to borrowers with good credit. When thinking about refinancing federal student loans, proceed with utmost caution. Your government advantages, such as public service debt forgiveness, forbearance, postponement, possibilities for an income-based repayment plan, and loan balance forgiveness after paying the necessary number of years of payments, would be lost if you do this.
Forgiveness of Public Service Loans
Certain public service positions and teaching positions in public schools allow you to have some or all of your college loans erased. Read up on the Best Ways To Obtain Student Loan Forgiveness to discover more about Public Service Loan Forgiveness, or sign up for our 15-minute program to learn how to apply.
Make sure you meet all requirements by taking note of the employment term’s requirements before you start.
Add all additional funds to your student loan.
You were fortunate and earned some additional money. It might be a tax return, a gift for your birthday, an unexpected check, or even winnings from the lottery! It is normal to gradually (and frequently unwittingly) increase your expenditures after receiving a rise. Maintain your current level of expenditure while paying down your student loans.
You might want to spend more money on items you couldn’t previously afford, but resist the urge. Long-term freedom will make the effort to maintain a healthy lifestyle worthwhile. Put 50% of any raises toward further payments, at the very least, while you’re still in debt.
Change Your Budget
Fine-tuning your budget is an excellent method if you need to find extra money but find it difficult to raise your income.
Using a budget allows you to prioritize your priorities. It is intended to give you the freedom to choose how to spend each dollar rather than to deny you what you desire. Consider it a strategy rather than a sanction.
Final Reflections
The burden of student loan debt can make life stressful and boring. Pay it off as soon as you can without completely upending your life. You might need to use your creativity to discover additional funds in your budget, increase your salary, refinance to save, or find novel ways to persuade someone else to pay off your loans in full or in part in order to accomplish that. It is worthwhile to consider all possibilities because your financial future is at stake.
