With education costs on the rise, Americans owe nearly $1.3 trillion in student debt. If you have just graduated from college or are the parent of a recent graduate, you might be wondering how you should pay off student loans.
In this article, we will dive deeper into how you can pay off student loans fast.
One way to pay off student loans early is by paying more than the required minimum amount. By making larger payments on your loan, you will be able to pay off the principle much more quickly while saving big on interest expense.
You could also send payments in twice per month rather than paying monthly. The sooner you pay off your student debts, the sooner you can make other investments with your money. The money could also be used for retirement or an emergency fund.
One of the smartest moves you can make when it comes to student loan debt is refinancing. When you refinance a student loan, you should see a decrease in interest rates. By reducing interest, you are then paying more money towards the loan principal. Only refinance your student loans if it means a lower interest rate.
Lower Your Budget
This may seem obvious, but many young graduates tend to lose sight of their financial futures. For many of us, our first “paid” job can mean a larger flow of cash into our lives than ever before. Instead of planning an exotic vacation or spending your extra income on electronics, use the extra money to pay off your loans faster.
Avoid Longer Repayment Programs
If you are struggling to make your student loan payments, you might have considered a repayment program. Although a repayment program does lower your monthly payments, your loan amount does not get reduced.
This means that you will make more payments overall with a lower amount due at each billing period. This may sound enticing, but it is actually the most expensive options since you will be paying much more in interest over the life of the loan.
If you are struggling to repay your student loans, making a plan of action can help you save a lot of time and money. Take a few moments and sit down to see what your best options are to pay off your student loans early. Although you may have to spend more time planning out your repayment strategy, you could literally be saving thousands of dollars in interest when repaying your student loans.