Taking out student loans to make it through your advanced education courses can be a necessary evil for many of us these days. You may feel like you will never get ahead of your loans, but fortunately, with a little financial savvy you can get out from under its thumb sooner than you think.
Paying off student loans doesn’t have to take 20 years. Take charge of your debt and pay it off quickly with these 9 tips you need to know.
1. Paying Off Student Loans Can Happen Faster by Making Bi-Weekly Payments
It may seem surprising but paying your monthly loan every two weeks can actually help pay your loan off faster. You don’t have to increase the amount of the payment, just split it in half.
If you get paid bi-weekly this payment just becomes part of your bill-paying schedule and you won’t notice that you ultimately make one full extra payment over the course of the year.
For example, if you owe $200 at the end of the month then make a $100 payment on the 15th and then your second payment on the 30th. If you are using the typical 10-year repayment schedule, this trick could save you an entire year of repayments plus save you all the interest that normally accumulates.
2. Take Advantage of Cash Windfalls
As with most debts, you want to avoid making just the minimum payments. It may seem overwhelming just making the expected payment amount but if you can afford to throw a little extra cash to the minimum amount, that will greatly reduce the number of payments needed and help with saving interest too.
It is also effective to put any of the extra money you earn throughout the year towards your loan. For instance, you may receive cash from your parents or grandparents for your birthday. Instead of keeping it and using it on something else, send it to your loan. It might not be as fun as buying new clothes or going out, but your future self will thank you.
Other great ideas for coming up with extra cash to apply to your student loan are setting a goal of a no-spend month to save some extra cash, using a bonus you get at work, or applying your tax refund toward your loans.
3. Get a Side Hustle
If you have already trimmed down your budget and are wanting to really knock out your student loan you can try supplementing your regular income by getting a side hustle.
There are many different options for side hustles, so finding one to meet your schedule and interests should be no problem. Some easy ideas are freelance writing, ridesharing, or tutoring. You can also clean out your closets and garage and make some extra money selling your things online.
Better yet though, I’d recommend that you learn a new skill where you can make some serious money.
My best suggestions on this front are to study and learn:
Copywriting – This is the art of writing to sell
Sales Skills – This is being able to sell face to face or on the phone
Facebook and Instagram Advertising – This is driving sales or leads through FB and IG
YouTube Advertising – This is driving sales or leads through YouTube
Content Marketing – This is marketing a business through written, audio, or video content
Video Production – This is editing and enhancing video content for companies
If you pitch any of these skills to a business owner, they will pay you some serious money. I’m confident about this, because I am a business owner and people who are great at these skills are extremely valuable, mostly because they all correlate in some way with creating new business revenue.
While you may not want to spend time learning a new skill to do part-time, you also don’t want to be in debt for the next 20-30 years. Plus, you might just realize that you could double or triple your income within a couple months by becoming more skilled (that is, valuable) to the modern marketplace.
I’ve helped several of my friends and mentees learn new skills sets of higher value and watched them become financially free in record time. Since we’re living in the Information Age, it’s never been easier to acquire new skills.
4. Sign Up for Automatic Payments
This technique won’t have the largest impact on getting your loans paid off quickly, but every little bit helps.
Most student loan servicers give you the option to sign up for automatic payment withdrawals and as an incentive, they can offer a .25% discount. This will also help ensure that you don’t miss a payment and have to pay a penalty fee.
5. Consider Refinancing
Refinancing your student loan through a private lender is a great way to replace your existing debt with a new loan at a lower cost. It won’t cost you anything to refinance and it may reduce your monthly payment or lower your interest rate.
In order to qualify you will need a credit score in the high 600s or higher and a steady income. If you are lacking in either of these options, you may need a qualifying co-signer to help you out.
6. Certain Repayment Plans Are Not Beneficial
If you are struggling to make your monthly payments, then certain government repayment plans are a great option, such as income-based plans. However, if you are trying to pay your loans off fast, and can afford to do so, avoid these types of programs.
These programs will lower your monthly payment but extend the length of your overall loan term. This means that while in the short term it seems to be beneficial, you end up paying more in the long run by extending the amount of interest you owe.
7. Volunteer at a Nonprofit Organization
There are some nonprofit organizations that offer student loan repayment assistance in exchange for completing projects.
This is a great way to give back to the community and also work off some of your student loan debt. Most of the organizations have strict guidelines in place and criteria to meet in order to meet the requirements for repayment assistance, so be sure to take it seriously and follow the rules.
8. Consider a Career Change
If you’ve been looking at changing jobs or careers altogether, this may be the perfect opportunity to look into companies that offer to pay off student loans as a benefit.
Some employers are realizing the need of their employees in paying off their student loan debts and offering it as an incentive to competitively gain qualified new hires.
Another option is to work in a field such as a public servant, nurse, or federal agency employee, to name a few. These fields may be eligible for student loan forgiveness or assistance.
9. Make a Payoff Plan and Stick to it
No matter what type of repayment plan you decide to go with, the key is to set the goal and then stick with it. Make sure to keep the plan a realistic one for your financial situation so you don’t lose heart and give up, and also check-in every once and a while to see how you are doing.
Find out when your expected pay off date is when you get started and every so often check to see if the date has moved, this is a great incentive booster and a way to see your progress.
Are You Ready to Get Started?
It may seem like paying off student loans quick is a daunting task at first, but once you have a plan in motion and begin the process you will soon realize how beneficial it is.
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