Student loan debt is second only to home mortgages in total amount owed by all borrowers. When you start making student loan repayments, it’s easy to become discouraged by the sheer amount of debt that you have. Repaying your loan can mean that finances are tight when you finish studying, and your student debt could even delay you from making other financial commitments like buying a home or car, getting married, or starting a family.
The good news is that student loan debt won’t last forever. Some effective methods can help you to repay your loan faster while you are studying and after you graduate.
These are five of the best ways to pay off a student loan early.
1: Pay More Than the Minimum Payment
The simplest and most effective way to pay off a loan faster is to pay more. A loan can be a huge burden and you may think that increasing payments will make life more difficult in the short term. While this is somewhat true, the long-term benefits are well worth it. You’ll come out better off because you will pay less interest and you will be debt free in a shorter amount of time.
Making sacrifices to increase your repayments will be a decision that you won’t regret.
2: Consolidate if You Have More Than One Student Loan
Although this won’t apply to everyone, it can be very effective if you have multiple student loans that are becoming difficult to manage. When you consolidate your student loans, it means you combine all your loans into one BIG loan. Consolidation helps you better manage your debt, and it can reduce the total amount of interest that you pay. Consolidation can also allow you to change the terms of your loan repayments to pay off loans faster with slightly higher monthly contributions.
3: Work in a Field That Offers Loan Forgiveness
Some professions can reduce payments or provide complete loan forgiveness after a certain period of tenure. This is one of the best ways to pay off a federal loan faster, and it can get you working in some very rewarding fields.
Eligible jobs in Nursing, Education, and Public Service can offer loan forgiveness programs through complete discharge or subsidized repayments. Some private employers also offer subsidies on student loan repayments.
4: Live Lean While You Are Paying Your Student Loan
To pay more on your loan you will need to make certain lifestyle sacrifices. These will be short term and can be managed with some commitment. Consider cutting out unnecessary luxuries such as:
- Cable television subscriptions.
- Online service subscriptions (Netflix, Amazon Prime, etc.)
- Consider living with family or in a shared home situation with a roommate to reduce living costs.
- Cut down on expensive entertainment and dining habits.
Look at your budget and find out where unnecessary purchases can be made. It can be surprising to learn just how much you spend on luxuries and miscellaneous purchases.
This can also be applied while you are studying. One of the keys to paying off a loan faster is to have a smaller loan in the first place. Reducing your expenses while you’re studying will mean less total debt once you graduate.
5: Take on a Second Job
Earn more and spend less. It’s a simple formula that has worked for many graduates when paying off a student loan. Aim high in your career and reinvest any bonuses or pay increases into your student loan repayments. A second job or a small business venture could also help to pay off a student loan faster. Utilize your skills to offer a service; examples can include dog watching, babysitting, part time waiting jobs, tutoring, etc.
Student loan debt can feel crippling at times. No matter how heavy your debt feels, it’s important to know that there are always ways for you to repay a loan faster. Every effort counts and even the smallest payment increases will have a compounding effect that brings you closer to financial freedom.
Watch our video tutorials to learn about consolidating, loan forgiveness and other repayment programs offered by Federal Student Aid and get your questions answered by becoming a patron at www.JustDoItAfraid.com , a mentorship program for young adults.