There are stories about people paying off their student loans early, and a lot of those stories are real. Some students have paid off their $80,000 loan in under five years. How did they do it? You shouldn't need a lot of motivation to pay off your loan as quickly as possible to enable you to do other things with your money.
Does buying a new car, buying your first home or traveling sound better than paying off a loan for years? That student loan needs paying off first, and here's why.
There are more than 44 million Americans with student loans and owing over $1 trillion. No doubt, they all want to pay back their loans as well. The average college student has more than $38,000 in student loan debt when they graduate. Some students make it their priority to pay off that debt.
What's the Best Way to Quickly Pay Off Your Student Loans?
Start with your mindset. If you do nothing, then nothing changes. You need to be willing to work hard. Be ready to make some short-term sacrifices. They will eventually pay off. Keep a focus on your goals. That feeling of freedom when your debts are paid will be great. Imagine that feeling of happiness and satisfaction when you make your last payment.
Here's a list of things you can try that will help you pay off those student loans faster. Some are budgeting tips, and others are opportunities you can create yourself. See what category will fill you with inspiration to push you towards financial freedom.
Understand Student Loans
Make the time to understand fully all about student loans and what other financial aid there is available. A student loan may sound straightforward, but there are a lot of potential options that you can also consider.
Many students graduate and have a number of different loans from various lenders as well as from the federal government and private lenders. You need to make up your mind about which loan best suits your situation.
Paying Off Student Loans While Still in College
Here are a few ideas to help you start thinking about paying off those student loans while still in college.
1Apply For Grants and Scholarships
Find out if there are any grants or scholarships available. You might be pleasantly surprised at the number of privately and publicly sponsored awards for which you can apply.
2Look For a Part-Time Work
Can you manage a part-time job while studying? If you can manage it, start looking for a job that fits into your study schedule. The money you earn can go towards your education.
3Try Alternative Ways to Make Money
There are numerous money-making jobs you can do while attending school. Things like freelancing, crowdworking, tutoring and signing up for work-study programs.
4Start Repayments Before Graduation
You may be able to pay back the student loan before graduating depending on the type of loan you have.
Warning!Any money that you pay before graduating goes straight onto the principle loan balance because interest does not accrue until after you have finished or left school. You need to check that your loan does not attract early payment penalties.
Simple Tips For Paying Off Student Loans Fast
There are a few steps that will help you repay your student loan faster. Some of them include payment set up, schedules and sticking to budgets.
- Calculate Your Loan
If you want to pay off your student loan quickly, then you better figure out the payments you will need to make to achieve that goal. By using a student calculator, you will be able to see the amounts and the time frame quickly and see if it’s realistic.
- Arrange Auto Payments
This is silly simple. Lenders sometimes offer lower interest rates if you set up automatic online payments.
- Punctual Payments
Late payments or defaulting on payments will cost you in penalties and additional interest. Just add all that to your total repayable amount!
- Pay Fortnightly
By paying fortnightly, you will make one additional payment each year. It also means you are paying down your principal faster, and that helps shorten your loan period.
- Is Your Student Loan Interest Tax Deductible?
When doing your annual tax return see if the interest you have paid qualifies as a deduction. When you receive your tax refund, put the amount towards your loan.
Stay on Track With Your Goals
Buying a new car or taking a luxury vacation may sound great, but if by doing any of these you set back your loan repayment goals, it's not worth it. Live within your means, or below them, and make the paying back of your student loan a top priority.