A lot of college students borrow money to pay for their higher education expenses. However, it can prove to be overwhelming if you graduate with student loan debt hovering over your head. Here are ten tips to help you pay off your student loans in a shorter amount of time so that you can live The College Investor motto: get out of debt, nail the personal finance basics, and start investing.
These ten tips to pay off your student loans fast are a great way to start!
1. Leverage Student Loan Exit Counseling
Before you leave college, you are given the opportunity to attend student loan exit counseling. You should try and make the most of it, as it will help you understand your responsibilities/rights when it comes to repaying your student loan.
What many college graduates don't realize is that a student loan's collateral is future earnings. So, just like if you don't make your car payment and the bank repossesses your car, if you don't make your student loan payment, the government will take your income through wage garnishments, tax return offsets, and even Social Security garnishments.
2. Focus on Paperwork
This is one thing that you should never take easy. First and foremost, see to it that your lenders have your current address on file. Secondly, don’t just skim through what they send you – read everything so that you can correct any errors. Also, avoid delaying completion of any forms. And be sure of when you will have to start paying off your loan.
The key to this is to make sure you're financially organized.
3. Go Through All Your Student Loans
Reviewing all of your loans will help you get things in place. Begin by ordering your loans according to the interest rates – from the highest to the lowest. If you notice that you are able to pay more than the monthly minimum, then it makes sense to put your money towards the loan that has the highest interest rate.
Once you go through your loans, you can either setup a debt repayment snowball or avalanche. The choice of method is yours alone.
4. Consider Debt Consolidation
Student loan consolidation is a way to bring all your federal loans under one roof by combining them. If some of your student loans have a “variable rate”, then it may help in lowering your interest costs. However, before taking any step, you should keep in mind that if you go for debt consolidation, you risk losing the forbearance and deferment rights to your current loans.
5. Stay on Top of Your Payments
Missing out on payments should always be avoided as it may lead to financial penalties being levied on you, especially if your loan is sent to a collection agency. Also remember that bankruptcy typically does not eliminate student loan debt.
If your loan is already in default and you're trying to get back on track, you need to go through student loan rehabilitation.
6. Boost Your Income
Given the kind of ups/downs the market is going through and with unemployment on the rise, getting a raise may not be an option. However, you can increase your income by freelancing. By utilizing your free time to freelance, you can create an extra source of income that can greatly contribute to finishing off your student loan debt.
If you don't know where to start, you can check out this list of 50+ Ways To Boost Your Income After College.
7. Find Workplace Happiness
When you love your job you tend to work really hard and everything else seems to fall into place and that is what will happen if you love what you do. Payments don't seem to be nagging at you when you stop caring about income and love your job. Finding a career to love begins with your choice of education. People who want to work in faith should consider biblical ministry degrees just like people who want to work with patients quickly should consider online medical schooling.
8. Choose Graduated Student Loan Payments
Before you get confused, a graduated student loan payment plan simply means that your payments start off low, and then are gradually raised every 2 years. This works well if you see your income increasing consistently in the coming years.
Check out all of the the different student loan repayment options here.
9. Use Deferment
A deferment allows you to suspend your student loan payment temporarily, which is nothing but delaying it. So what qualifies you for a deferment? For starters, economic hardship to unemployment can help you qualify for it. Being in school, college, and as well as an internship program also qualifies you for one. However, do check if you will be charged any interest while you’re in deferment.
10. Get a Job that Helps You Pay Back the Loan
There are many different occupations out there that can help in cancelling some of your debt, or in other words have some of it forgiven. For example, you could be eligible to have a part of your federal loan paid off if you happen to teach in a low income area. There are also various volunteer programs such as Peace Corps, AmeriCorps, etc. that get you eligible for grants to pay back your student loan.
Paying off your student loan doesn’t have to be hectic or uncomfortable. It can be a smooth experience, given that you are taking the right steps to pay it off quickly and easily.