How to Pay Back Student Loans Faster
Strategies for Paying Back Student Loans
Are you overburdened with student loans? Do you keep wondering about whether the loan repayments will ever come to an end? Will an end come to it at all? I can feel your pain. I can just imagine how you feel when you need to set aside certain amount aside every month for the repayment of your student loans from the salary that is not even enough to meet your needs. Well, you are already into it. You just need to find ways of coming out from the shackle early enough. As someone has said, you cannot claim total freedom when you are still in debts. Therefore, the sooner you are able to pay off your student loans, the better. The good thing is that, whatever situation you may be in life, other people have been there and they scaled through it. Therefore, instead of feeling bad about your student loan debts, you should let that encourage you. You need to cultivate “I can do” attitude. If other people have done it, then you can equally do it.
Hearing and listening to people who have been able to pay back student loans in a good time, I have come up with these tips which I believe can help you too. If you do what successful people do, you can also be on your way to success.
Also Read: Are You Having Problem Paying Student Loans?
How to Pay Back Student Loans Faster
- Make more than minimum payment: Don’t fall into the trap of minimum payment. You may think that your lenders like you by allowing you to be making minimum payment every month. I am not saying they hate you either. But the truth is that, minimum payment cannot take you anywhere if you actually desire to pay back your student loans faster. When you make minimum payment, you are just scratching the surface of the loans. Minimum payment essentially is to take care of the interest on the loan while you are only paying a small or minute part of the principal. Those who have been making minimum payments can attest to what I am saying. They will realise that even though they have been consistently making the payment, the loan amount seems to remain. Minimum payment is a trap. It will just keep you serving your lender for a long time. They too enjoy it because the longer your loans remain, the more interest income they make. That is why I say that you should not think that your lenders love you by encouraging you to make minimum payments. It is just self-interest. So, if you want to pay back student loans very fast, you should make sure that you don’t just remain at minimum payment.
- Make an extra payment: Besides the regular repayment amount that you make every month which I expect that it should not just be minimum payment, you should also endeavour that you make extra payments as opportunity allows you. Any time you receive money that you don’t expect such as gifts, tax refunds or share of inheritance, you can apply this towards paying down your students loans. Don’t just go on a spending spree. Apply the money positively. The question you need to ask yourself is, what of if I didn’t receive the money. Of course, you will still live within your means. I am not saying you should deny yourself of good life. But there are certain things you can delay for now. And you know why you are delaying them. This act is called delayed gratification. What is the point of feeling so high just for a moment and you later come back to face your student loans which are becoming a monster to you. The truth is that, delay is not denial. If you cannot enjoy some things today, that does not mean you can’t enjoy them tomorrow. You just need to be patient with yourself.
Read Also: Questions to Ask About Private Student Loans
- Make a lump sum payment: Depending on the term of your student loans. If you took federal student loans, I understand that there is no repayment penalty. You don’t need to wait for ten or twenty years before you pay back student loans. If you have the money to pay, you can pay off the balance left in loan account. But for private student loans, some of them may impose repayment penalty which may discourage people from making such lump sum payment. The private lenders like enjoying the interest income on the loans for a long time. So, if your student loan is private, you need to first count the costs and weigh it to determine whether it will actually worth it if you should make lump sum payment.
- Refinance your loans: If the terms of your student loans are not favourable, you can actually take the route of student loans refinance. It is not compulsory that you must refinance your student loans with your existing lenders. You have the option of shopping around so that you can compare interest rates and other terms before you decide for a particular one. If you know that you have the means, you can actually refinance your student loans to a shorter duration. But this will imply that you will be paying higher amount every month. But this will help you achieve your desire to pay back your student loans faster.
- Apply for student loans forgiveness. This applies to federal student loans. Government has different student loans forgiveness programs. You can chose to take a job that qualifies you for student loans forgiveness. Contact your loan servicer to enquire if you qualify for any student loan forgiveness program.
Read Also: Eligibility for Federal Student Loans Cancellation
- Cut your Expenses: If you still have student loans to pay, it is not the time to eat with your two hands. You need to cut certain expenses. Prioritize your expenses and cut away all unnecessary expenses. The ones you cannot cut away completely, you might be able to reduce. Making your own meal instead of eating outside may save you some bucks. I have had stories of people who had to live with their parents so that they can save money on rent. You can imagine how fast you can pay off your student loans if you don’t need to pay rent. Though it is not enough not to pay rent or to cut expenses, you should see all these as savings and you must apply the savings towards repaying your student loans.
- Earn extra income: At times, you might have stretched yourself thinly that you can no longer cut any expenses. If this is the case, you can still do something. You can take another job or start a side business that can fetch you extra income. Getting a new job that pays you better salary may also be a good step to take. Even, if you are good at your present job, you might even ask for a raise from your boss. But you should be able to justify this.
If you can adopt these strategies on how to pay back student loans faster, you will realise how quick or fast you will be out your student loan debts.