iQuanti: A good education can be priceless, but it may not feel that way each month when you receive your student loan statement. Unfortunately, many graduates are paying off hefty student loans after they graduate which can severely hinder their financial goals like saving for a down payment, on top of keeping up with regular bills. However, with some diligence and consistency, graduates can pay off student loans faster with a few different strategies.
Start Paying Immediately
You may be able to start making payments during your grace period even if you're not yet required to. A grace period for student loans is a stretch of time after you've graduated or left school when you're not required to make payments. Most student loans have a six-month grace period, but please check with your lender for details specific to your loans.
If you make payments before you have to, you may be able to cover – at minimum – the amount of accruing monthly interest reducing the cost of your overall loan.
Pay More Than Your Monthly Minimum
In addition to making payments as early as possible, paying a little more than your monthly payment can help reduce the total cost of your loan over time by paying more towards the principal, reducing the interest accrued, and potentially the number of payments you will have to make overall. If you have multiple loans, it's a bonus if your loan servicer allows you to allocate those additional payments toward the higher interest loan first.
Check Loan Forgiveness Qualifications
There are several feasible ways for many people-maybe even you-to have some of your federal student loan debt forgiven. For example, if you work in public service, are a teacher, medical professional, or a service member in the U.S military, you may qualify for certain loan forgiveness programs, such as Public Service Loan Forgiveness (PSLF).
Or, your employer may offer student loan repayment assistance for employees. If they do not, starting the conversation about adding repayment assistance as an employment benefit could lead them to consider it – you never know!
Refinance Student Loans
Refinancing your student loans could help you save money and become debt-free faster. When choosing to refinance student loans, you essentially replace your existing loan with a new one with different terms. This could help you secure a lower interest rate, potentially saving you money over the lifetime of your loan. Student loan refinancing can also help you shorten your repayment term, which can help you pay off your debt sooner.
However, student loan refinancing may be a better option for those with private loans rather than federal loans. If you refinance federal student loans with a private lender, you will lose access to federal programs, such as income-driven repayment, federal forbearance, and any other benefits offered to federal borrowers.
Use "Surprise Money"
Do you get bonuses at work? Maybe you received extra cash as a gift during the holidays, a birthday, or when you hit a particular milestone? You may consider using those extra funds, or your tax refund, to repay your student loan faster.
Using these strategies to pay off your student loans quickly, you can set yourself up for a student loan-free future.
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