Student loan debt is at an all time high, and now more than ever students are being saddled down with financial strain that can take a lifetime to pay off. If you’re like many students out there, you’re hoping to pay off your loans sooner rather than later. The good news is, with a bit of discipline you can reduce your loans and get out of debt sooner. Here are our tips for paying off student loan debt.
Pay More Than The Minimum
Like credit cards, paying more than the minimum is essential to getting out of debt faster. For example, if you have a 10 year term on a $30,000 loan at 6% interest and pay just an extra $100 a month, you can save $3,048 in interest and pay off your loan 2.83 years sooner. That’s nearly 30% faster than if you only paid the minimum.
Make A Lump Payment
Instead of using your tax return or savings on a vacation or a new car, use any additional income to pay off your loans faster. While you may have to forgo some fun or shiny new wheels, it will be worth it in the long run to free yourself of debt.
Until you get your loans paid off, reduce your overhead as much as possible. This means living in a less expensive apartment, skipping happy hour and your morning Starbucks or not buying those shoes you really want. Delaying gratification and short term sacrifices pay off in the long run.
Refinancing is a great option if you have good credit. Private lenders typically have lower interest rates than university private loans and federal loans. Many private lenders offer rates under 3% so it’s definitely worth applying to see what is available for your situation.
Get A Side Hustle
Whether it’s selling stuff on Ebay of walking dogs, getting a side hustle and using the extra income to pay down your student debt is one of the best ways to pay off your loans faster. As long as you stay disciplined and use the extra income solely for paying off your loans, you will get out of debt is significantly less time.
Make Extra Payments
Contact your lender in writing and let them know you want to make additional payments. Be sure to let them know you want them to apply the payment to the principal amount only within the same month. Without specifying how you want the money applied, the lender will use it to make next month’s payment and you will accrue the interest. So, be sure to let them know the payment is an additional payment not a future payment.
Apply For Loan Forgiveness
If paying off your loans seems infeasible, try applying for loan forgiveness. Non-profits such as Public Service Loan Forgiveness and Teacher Student Loan Forgiveness are still available if you qualify.
Teacher Student Loan Forgiveness is available if you are a full time teacher with at least 5 years of teaching elementary of secondary schooling or if you have taught within an educational service agency that serves low income families.
Public Service Loan Forgiveness is available if you have a federal student loan and are employed full-time at an eligible state, local or federal public service job or 501(c)(3) non-profit job.
Loan forgiveness is a bit more difficult to get, but it’s a great option if you are employed full time and still unable to make your payments.