Follow 3 quick tips for paying down student debt fast!
According to the Institute for College Access and Success, seven out of every ten college students will acquire student loan debt. The average student will graduate with roughly $30,000 in debt, and the numbers are increasing. Since 2014, the amount of loan debt acquired by college students has grown 4%. Post-graduate debt numbers are even higher. While you may find yourself in debt because of your education, you can get out of debt quickly, as long as you are willing to push extra money toward your loans. The faster you are free from student loan debt, the better, so consider using some of these practices to get out of debt quickly.
Use Cash Windfalls
You can use cash windfalls to help pay off student loan debt fast. Tax refunds, Christmas money, and work bonuses can all be used to help make a dent in your student loan debt principle, and you’ll see a big drop in the length of time you will be stuck paying down the debt. Since windfall money is not money that you would traditionally factor into your budget, it acts as extra cash that you won’t feel when it’s gone, but it can make a big difference in your loan debt. You don’t have to use all of the cash from these events either, even putting an additional $500 toward your loans can make a huge difference in your repayment and the interest you incur.
Pay above your Minimum
Financial experts suggest paying more than the minimum on your loans each month.; even putting an additional $50 per month toward your principle can cut down on your repayment terms. Experts suggest reevaluating how much you pay toward your student loan debt every time your income increases or an additional bill drops off. For example, if you finished paying off a credit card, you can use the money you allotted each month to credit card debt and route it into your student loan debt. By paying above the minimum, the additional money will go toward the principle of your loan, rather than interest, which can help you cut months off your repayment schedule and save you money in the long run.
Refinance and Consolidate
If you’ve been paying your loans for some time and don’t feel like you’re making much progress, you may want to look into refinancing your loans. A lower interest rate may help you pay back your loan quicker and accrue less interest, but you should consider your options carefully. Not all consolidation and refinancing options are created equally, and you’ll need to sit down and look at the hard numbers to figure out if it is worthwhile to refinance, or if simply paying more toward your minimum payment would fit your goals better. Speaking with a financial advisor can help you make this decision.
Since student loans have interest attached, it is best to pay off your loans as quickly as possible. These loans also rarely carry early repayment penalties, meaning you won’t be penalized for paying your loans off quicker than the agreed upon terms. Because of this, financial experts suggest working out a budget that allows for aggressive payments toward student loans. You can pull money away from your entertainment budget, for example, to pay more toward your loans. Students who pay even $100 more a month are more successful in paying off their loans than those who simply pay the minimum requirement. Budget wisely, and pay down your loans aggressively.
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