While student loans are a common choice for funding a college education, they should only be considered after you've explored other financing options, including working while in school. If you do decide to take on debt, have a systematic plan to pay off the student loans after the college degree is secured. Here are some tips to pay them off quickly.
6. Put yourself on a budget.
You need to maximize the speed at which your student loans are paid off. Putting yourself on a budget will allow you to properly prioritize expenditures. You just need to decide what you can survive on without living in complete misery. People who stick to budgets are far less likely to experience a financial crisis of their own making and, as a result, pay down student loans faster.
5. Pay off variable private loans as soon as possible
Many students end up with different type of loans. Some loans are fixed (rate of interest does not change during the term of the loan), others are variable. Some loans come from private lenders (banks and credit unions) while other loans come from the federal government. One of the biggest risks associated with variable loans is that if the market rate of interest increases, loan payments increase as well and the increase can be very high. Paying variable loans first will allow you to face a more predictable cash flow system.
4. Focus on private fixed loans (if any) after you've paid all of your variable loans off.
Private loans, in most cases, are more expensive than federal loans. Most private loans are variable loans though.
3. Choose a federal loan repayment plan wisely.
Selecting the lowest monthly payment plan option will greatly extend the life of the loan and the amount of interest. Go to studentaid.ed.gov to calculate which repayment plan fits your budget.
2. Pay more than the minimum balance.
For example, adding one extra payment per year can shave years off of that student loan.
1. Loan Consolidation
If you find yourself in a situation where you cannot keep up with the payment deadlines, a consolidation loan may be an option for you. For information about consolidation, visit studentaid.edu.gov.
Paying for college can seem scary, but it doesn’t have to be. We're here to help.