A common agreement between those suffering from student loan debt is the fact that we have to pay it all back. We know what it feels like to have a fresh new paycheck and realize we have bills to pay one of those being student loans. Knowing you have to pay the student loans back every paycheck you receive, isn’t the best feeling in the world but there is a solution to that if you upgrade your student loan repayment strategy. Thankfully, we have put together a list of what we think is the Best Guide for Paying off Student Loans Faster. Read more to see how you can get additional ideas on how to attack your student loan debt.
Paying off Student Loans Faster in 2023
Luckily, there are many options to pay off your student loans faster, which include:
- Paying more than the minimum payment required
- Refinancing your loans
- Make a lump-sum payment with the extra cash you have
- Accept a job that you are eligible for loan forgiveness
- Use your job raises to upgrade your student loan payments
- Increase your payments by cutting your budget
- Use extra money from a side job to repay the loans
If you do not know much about these options and want to learn more, here is a list of other ways to pay off your student loans with a plan of action that works.
1. Pay more than minimum
From the payments you have to make each month, you are just increasing the payment by putting the extra money you have towards that.
One way to put this into action is to set automatic payments for your student loans while adding the extra amount into those payments. Maybe start at 20$ a month if you have the extra cash and then progressively increase those payments.
2. Doing the math on your payoff date
Paying off student loans is going to take quite some time, but you aren’t alone.
When managing debt, figuring out the payoff date is important, but once you have a set date, that should motivate you to find a way to move it closer so that you will have them paid off at a quicker rate.
3. Consolidate / Refinance
Refinancing your student loans it is highly recommended. With refinancing, you are decreasing your interest rates, which means that a bigger chunk of your payment goes towards paying your student loans.
When you are refinancing more than one student loan, you receive a consolidated loan with a single monthly payment. If that doesn’t work for you, then you can refinance only one student loan which will allow for you to get a lower interest rate on just that one loan. More commonly, you want to refinance the loans where you can gradually decrease your interest rate. A good rule of thumb is to start with the loan that has the highest interest rate and go from there.
4. Cash windfall
There are many ways that cash windfalls happen in the form of inheritance, settlement of some sort of lawsuit, and many more.
Although it is very tempting to spend that money, you should consider using a portion of that money towards paying off your student loans.
Maybe one way you get extra money is from your tax return. Think about how you could be closer to paying off your student loan debt by putting that money towards your student loans. This is a great opportunity to move you just that much closer to being free of your student loan debt.
5. Find and take a job offering forgiveness
There are many jobs out there that qualify for student loan forgiveness programs. These jobs generally consist of public sector jobs such as a teacher, firefighters, public service and more. With this in mind, there are generally many qualifications that you will need to meet in order for your student loans to be fully forgiven.
These forgiveness methods are connected to income-based repayment plans meaning your payment is decreasing but the downside is interest charges will come together.
With a federal student loan, some states offer loan assistance repayment plans. These repayment programs come with work requirement and if you meet the requirements, you might get money toward paying off your federal student loans.
6. Apply the raises you receive
Hoping that the job you have now allows you to have yearly raises, think about investing the money you got for your raise towards your student loans.
Some of these strategies used could benefit you in the end and help you decide where you want to put your money. It’s as easy as taking half of your raise amount and putting that towards your student loan payments.
7. Steer clear of repayment programs
We can all agree that we want to try and get our loan payments to the smallest amount possible and in order to do this we have to steer clear of income-driven loan repayment programs.
A big chunk of the federal student repayment programs are focused on decreasing payments. It will take longer to pay off your student loans with these programs due to the goal of getting a lower payment. In some cases, you may be able to get the lowest payment by making your repayment plan up to 20 years. In the long run, you will pay a considerably larger amount of interest then you will with your current rate.
Direct Loan Consolidation prevents you from paying off your student loans at the rate you want because they are taking all of your student loans with different interest rates and combining them into one giant loan. This way you can’t target higher interest loans with extra payments.
8. Compact your budget
Choosing to decrease your budget plan can help when you don’t have a huge income.
Earning side income can help out dramatically when trying to budget. Another huge help is to only buy the things that you really need and are vital to your survival. Maybe not that literal but something to think about. This may mean cutting down on shopping, going out and even less eating out.
This is only a short-term thing when you are focussing on paying off your student loans and if you are as determined as you say, then you should consider budgeting. By budgeting and increasing your payments on your student loans, you may be able to save thousands on interest, saving you a considerable amount of time and money.
9. Side money
Try putting away some extra money on the side, as well as sticking to your budget.
Side jobs help with having a little extra money here and there and that can also help when your income is low. Putting away more money for your student loans is the best thing to do and in the end, it will make you less stressed about your payments.
Using the side money for your student loans is a smart decision to start thinking about. Learning something new and making money in an easy way is always beneficial and can easily help contribute to paying off your student loans faster.
10. Strategizing your debt
When adding extra money to your payments for your student loans, that is always a good sign but that being said, it can also make a difference.
Paying off the highest loan first is a smart move. This is when you choose the loan with a high-interest rate and pay those first.
Private student loans are also important to pay off first. These loans have less flexible repayment terms but your rate could rise over time depending on the terms of the loan. You end up saving money on interest when you choose to pay off the student loans with the highest interest rate first.
Many student loan borrowers use the snowball method to help them pay off their student loans with the smallest balance first and then gradually work towards the largest payment loans. This method is only recommended if the borrower has a lower interest rate on these loans. In the case that you have a high-interest rate, you may want to start by paying off the student loans with the highest interest rate first and then addressing the other student loans from there.
11. Interest rate reductions
Signing up for automatic payments on your student loans depending on which method you decide to go with, they can benefit you in some way.
Many services offer a .25% deduction on the interest rate for federal student loans. this way you might be able to earn some money back.
This method could make life a lot less stressful because you will not have too much to worry about because you will not be missing any payments.
12. Taking advantage of credit and tax deduction
Anyone who is paying off any sort of student loans knows that you can be eligible for some sort of deduction. For taxes, this is a big bonus because you can take out $2,500 on your taxes for your student loans.
There are also other requirements that need to be met, but normally student loan holders that are in their 20s are eligible.
One might be eligible for credits on their taxes if you are currently paying tuition including grad school.
13. Student loans are not good debt
It is said to be that there are things such as good and bad debt, well student loans are a great investment and a smart decision to make but you certainly do not want them to be around forever.
It is said that the good and bad debt is going to increase our value in something such as a salary, but interest charges stack up when just letting debt sit around.
You have to choose the right route to take when being strategic but do not make excuses about your student loans because they are certainly not good debt.
14. Making payments every two weeks
This is one of the most common strategies for student loan repayment.
Do not try and double the number of monthly payments but, find a strategy that works for you best as in splitting the monthly payment in half and making that payment every two weeks.
By making this strategy a number one priority you will make an extra payment a year and if you re one of those people whose job pays them every two weeks this should be an easy task to overcome.
15. Anticipate the future with no student loans
This is not a repayment strategy but, finding motivation on removing your debt entirely can make your life so much easier and less stressful.
An easy way to see this in your near future is by finding the worst thing about your student loan payments, and imagine your life without having to pay those student loans every month and every year. This is a great way to get yourself motivated to help pay off those crappy student loans.
Picture what you can’t do at this time because of your student loans such as going out of town for a few days or living in the place of your dreams. This is motivation for the future. Work hard and you too can be where you want to be without student loan payments.