Millions of Americans used student loans to pay for college and now many of them are facing the reality of paying off those debts. It can feel overwhelming to look at your total balance, but keep in mind that paying off your loans is possible. You just have to take it piece by piece.
There are many different strategies that help adults pay off their student loans quicker and easier than traditional methods. In this blog, we’ll look at a few of your options for eliminating your debt so you can enjoy a life without monthly payments.
- Pay More Than Minimum
Did you know you can pay your debt off early? Many people fall into the minimum monthly payments and stick with that because it’s easy or automatic. However, if you opt to pay more than the minimum due each month, you could start whittling down your balance much faster.
One thing to keep in mind with this system is how your loan servicer applies your money. Some will take your overpayments and apply them to the next due date, which doesn’t really save you money. Be sure to reach out to them and tell them you want overpayments applied to your current balance.
If you have good credit and a steady job, then you might want to consider a student loan refinance program. When you refinance your loans, you take all of your educational loans and lump them together into one personal loan. The draw of this method is that you can often get a much lower interest with a personal loan, which makes it easier to pay off your debt quickly.
Refinancing can be tricky, so it’s wise to speak with your financial advisor before making this decision. Sometimes combining all of your loans into one big pot can have unintended adverse effects.
Autopay is a great way to ensure you’re paying down your loans because it saves you from having to think or worry about it each month. When you make out a monthly budget for your household, include how much you want to put toward your loans (ideally more than the minimum). Set up autopay in your account to draft that amount on certain days of the month.
Now you’re paying on your loan without having to think about it! You’ll start making more meaningful progress toward full payment because you’re always paying the same amount each month.
- Biweekly Payments
Just like you can pay more than the minimum, you can also pay more often than once a month. Making biweekly payments is a smart way to approach your student loan repayment because it essentially doubles your payments each month. This means more of your money goes toward your principal loan instead of the interest.
If you’re using autopay, set up two payments a month to draft from your bank account. You can schedule these for the days you get paid during the month or any two dates that work for you. Just remember to add it to your budget so you know the money is being withdrawn.
- Use Windfalls
This is advice no one particularly likes hearing, but it can go a long way to helping you pay off debts. Windfalls are any expected sums of money that you receive, such as tax returns, work bonuses or even profits from selling something. Any time you get a windfall, apply that to your student loan instead of using it for something else.
This does cut down on how much fun you can have with unexpected cash, but it’s an easy way to make significant progress on paying off your loans. It’s additional payments to what you routinely make in a month and so cut down on your principal amount.
Repaying student loans can seem daunting, but with these few tips, you can start a healthy habit of paying them down quickly.