Student loan debt can be massive, especially if you take on multiple degrees. It’s also one of the most dangerous debts to have, and is ridiculously difficult to pay off.
Always think twice or more before taking on a student loan/s.
Once you get into the ‘real-world’ and start working, you’ll discover just what a chore it can be to pay off your student loans.
It may take you years and many people are still paying for student loan debt in their fifties. Despite paying off what they initially borrowed, they’re still in financial servitude to the loan servicers because of the interest rates and fine print that accompany most student loans and still remain in debt to the tune of thousands of dollars.
While you may be wondering about loan forgiveness, the unfortunate truth is that most student loan debt is NOT forgiven and even if it is, there are consequences to this too.
You’ll not be eligible for federal benefits if you default on your student loan. The best thing you can do is to avoid taking student loans where possible… and if you already have taken loans, pay off your debt as soon as possible.
Your student loan debt will impact your credit score too. So, you’ll want to make your payments on time and apply the tips below.
Study the terms of the loan
The best way to pay off the debt will be to know exactly how much you owe and the interest rate you’re paying. Study your loan terms and have the details at your fingertips.
Consolidate your loans
Consolidating your loans can simplify things greatly and also make loan repayment much more convenient. If you have multiple loans from different service providers, consolidate them into one loan which you pay monthly. You may even get a longer loan repayment period now.
Refinance your loans
If you have an excellent credit score and you can get a lower interest rate as compared to what you’re currently paying on your debt you should refinance your student loans.
An important point to note here: when you consolidate and refinance your loan, you may be giving up the protection you receive with federal loans. This is the potential downside here.
Nevertheless, if you’re financially capable, you can definitely refinance your loan and pay much less in interest.
Have a budget
Have a budget for yourself and decide how much will go towards paying off your student loans. Do NOT shirk these payments. They’re not going away any time soon. So factor them into your budget and pay them off.
Aim to make more than minimum payments
Just like credit card bills, student loan debt will have minimum payments too. Here’s the biggest mistake most people make they only pay the minimum amount.
If you do that, you’ll be making payments for a long time because you’ll be incurring interest and paying for that too. Always seek to pay more than the minimum. Even $100 more makes a huge difference over time.
Adopt the ‘debt-avalanche’ method and pay off the highest interest loan first while paying the minimum on the rest. Once this debt is settled, put those payments towards the next highest interest loan. In this way, you’ll pay off your debts much faster and will become debt-free in the shortest possible time.
Automate your payments
Instead of paying off your student loans manually, make arrangements with your loan servicer to automatically deduct the payments from your bank. You might even be able to get a lower interest rate if you do this.
You’ll also be less likely to pay late and you won’t feel the pinch when it’s automated as compared to you doing it yourself.
Earn more money
Last but not least, the best way to pay off debt fast is to earn more. In fact, this is the most important tip of the lot. If you earn more, you can pay more towards your debt.
Consider starting a side hustle such as making money online. Or maybe drive Uber for 2-3 hours every evening. It may not seem like much, but over time, you’ll be amazed at how much more debt you can pay up with the extra income you earn.
Many people will balk at the idea of taking on more work. However, this doesn’t have to be forever. If you have multiple loans, you only need to work extra to pay off half the loans. Then you can stop.
Your regular income will be more than sufficient to pay off the rest of the debt fast. Usually, people are so motivated once they settle off the first 1-2 debts, that they keep at it until all the debts are settled.
With persistence and consistency, you can pay off your student loan debt and enjoy the freedom that comes with being debt-free. Now all the income you earn is yours (after taxes) and you can save for retirement and/or invest and grow your wealth. That’s when the real fun begins.