I guess not many people. It would be folly to sit and wait for a particular person to win the white house race for your student debt to be canceled. Here are some of the ways you can use to pay off your students loans faster:
1. Pay more than the minimum requirement
This might seem like an obvious one, but every year, more than 1 million borrowers go into default. This refers to the failure to make the minimum payment requirement for over a year.
So, the first step is to make sure that you make the minimum payment. But, if you want to clear the debt faster, you need to make a payment more than the minimum requirement.
Note: If decide to pay an extra $100 over the minimum required to pay off a $29,000 debt, you can clear it in just seven years as opposed to the usual ten years.
2. Make a repayment plan for every two weeks instead of monthly
Most people pay off their student loans, once per month. However, there are quite a number of people who receive their salaries every two weeks. Paying for your student debt every two weeks will help you pay an extra month in a year as opposed to paying off monthly.
In a year, there are 12 months, so if you make a payment of $400 every month, the year’s total will be $4800. However, if you make $200 every two weeks, within the 52 weeks in a year, you will pay 26 payments totaling to $5200. Just like that, you will make an extra payment of $400 in the year. It might not seem much, but in a couple of years, it will be worth it.
3. Sign up for autopay
Signing up for the student loans to be deducted automatically from your account can be very efficient. It will help you make repayment at the end of the month without fail. Some lenders offer discounts when you sign up for an auto repayment plan.
4. Make lump sum repayments
Next time you receive that tax refund, annual bonus or you close a deal with good returns, instead of purchasing that expensive watch or handbag you’ve been eyeing, make a lumpsum payment on your student debt.
You, however, need the discipline to delay that vacation to Hawaii or anywhere else or spoiling yourself with the finer things in life. It will save you a lot of money and help you repay your student loan earlier.
5. Apply for student loan forgiveness
If you have a federal loan, you might need to check whether you qualify for loan forgiveness. Loan forgiveness means you’re not required by the federal government to pay part or all your student loan.
Here are some instances whereby you might qualify for student forgiveness:
Public service loan forgiveness
Teacher Loan Forgiveness
Permanent disability forgiveness
Perkins loan cancellation
Here is the full list to help you know whether you are eligible for loan forgiveness.
6. Refinancing your student loans
Refinancing is a great option, especially when the interest rates are going up. It will help you consolidate your loans and get a lower interest rate. However, it’s good to know when refinancing isn’t a good option for you, including:
If you want to qualify for loan forgiveness.
If you don’t have a stable income and you’d want to be legible for income-based repayment plans.
If you have bad or no credit.
So, if you have a stable income and have other loans with high-interest rates, go right ahead and apply for refinancing.
It’s important to reiterate that if you refinance a federal loan, you forfeit federal protection since the loan automatically becomes a private loan.
Travis Hornsby of Student Loan Planner advises that one should have a loan refinancing ladder. A refinancing ladder involves refinancing your loans starting with a more extended repayment period or possibly 10+ years. After a couple of years, when you can pay more, apply for refinancing with lower interest and a shorter repayment period. Such a plan will end up saving you a lot of money and help you pay the loan faster.
At the end of the day, it’s your option whether to use that money to go for a vacation and maintain a particular lifestyle or pay off your students loans. However, be warned that if your default for a period, you might receive your paycheck only to realize that the government already took half of your salary. Its time to make wise decisions.