Student loans are at an all-time high. College costs are surging , and most households find it difficult to manage the payments. Students borrow from the Federal Government or private lenders, and regardless of the lender, the loan must be repaid.
The amount of money in student loans currently amounts to trillions of dollars, and the trend doesn’t seem to be slowing down. In fact, with the many new lenders entering the field, these numbers are likely to rise even higher in the coming years.
However, the tricks detailed below can help you start paying off your student loans a little at a time. It doesn’t take much to do this. All you have to do is come up with a plan and a strategy, and you are good to go.
Prolonging Your Student Life for a Little While Longer
We all know how the life of a student is. It involves minimal expenses, lots of opportunities to save money and of course plenty of time spent at home as you do not have money to go out often.
Graduating from college is a big deal, and you should celebrate this significant achievement, but it is essential to keep it simple. This is probably not the time to pop open champagne bottles and host extravagant parties.
Avoid big and unnecessary purchases for about one or two years immediately after graduation. Instead, allocate some of your earnings towards paying off your loan.
If you continue live the lifestyle of a student for some more time, you may be able to budget your new salary to accommodate paying off your debt.
In addition to your student loan, it is also essential to start saving for your future. So, don’t jump on to big lifestyle changes like living independently and paying all the rent yourself. Saving is the key.
The Debt Snowball Method
This loan repayment technique will help you roll the debt away. Here is how it works. Create a list of all your loans, starting from the least balance to the greatest balance.
Month by month, allocate your savings towards the smaller balances little by little, and for the big loans, pay the minimum only. As the smaller loans wither away, you will be left with fewer loans and lesser debt.
This method is great because it helps you pay off all of your other loans as well, and not just the student loans. This is because this way you address all your loans, including the student loans.
Take On a Side Job
If you want to pay off your debts quickly, then consider taking on another job so you can earn some extra money. Ensure that any extra money you have is used to pay off your debts rather than wasting it elsewhere.
There are plenty of jobs you can take on as a fresh graduate that can earn you some money such as tutoring, working at a late-night pharmacy, etc., depending on your full-time job.
Refinance Your High-Interest Loans
Refinancing may not be ideal for all situations, but it is a great idea for someone with lots of loans at high-interest rates. You must, however, be extra careful when deciding to refinance your loans, and adequate research is key here.
Visit as many credit providers as possible, to find the one that will refinance your loans at the lowest interest. There are however some pitfalls to watch out for when it comes to refinancing loans.
For example, if you do refinance your federal loan using a private lender, you will lose out on some federal perks such as deferment, forbearance, and income-based payment.
Paying Off Your Loans While Still in School
If you are still in school and are making some money, start paying off your debts already. You can start preparing yourself to come up with a plan on how to repay your first student loan.
It is a good idea to start repaying while still in school as many student loans normally accrue interest while you are in school. By the time you graduate, you will have a big amount to repay.
By making small payments on your loans, you will diminish the total loan, and the cumulative interest as well.
With these tips, we hope that you will start your journey towards paying off your debts. It cannot be done overnight, and taking it one step at a time is key to achieving more than you can ever imagine. All the best!