4 Ways to Pay off Student Loans Faster
4 Ways to Pay off Student Loans Faster
Paying back student loans can feel overwhelming. Student loans can often eat up a big portion of your paycheck, particularly if you’re a recent graduate, making it even more difficult to get ahead. Fortunately, there are manageable ways to balance repaying your student loans so you can set yourself up for a solid financial future while making your debt disappear. Below are some ways to help expedite paying off your student loans.
1. Make Payments Early
With student loans, repayment usually doesn’t begin until after you’re done with college. In order to get a head start on repaying your student loans, consider making payments during this grace period if you’re able to. Doing this allows you to ultimately pay less over the life of the loan. Starting payments early means you’re giving the debt less time to accumulate interest. Making payments early can also lead to more financial freedom down the road as you’ll have the ability to save for other financial goals like purchasing a home or saving for retirement with the extra funds you’ll have available.
2. Enroll in Auto-Pay
Signing up for automated loan payments can help avoid late fees and could even lower your interest rate, saving you money over the life of the loan. Most loan providers offer an automatic debit payment option from your bank account. Enrolling in this service will help ensure that you make your payments on time and sometimes loan providers even offer special interest rate deductions if you enroll in auto-pay. With a lower interest rate, you’ll accrue and pay less interest over time, which will save you money. Although the discount is minimal, it’s still extra money you can use to help pay off student loans faster. Contact your loan provider and ask about enrolling in automatic payments. You can also use SDCCU’s easy online bill payment service, Bill Payer Plus®, to help save time by enabling you to easily make payments online.
3. Explore Refinancing or Consolidation
There are many benefits to refinancing your student loans or consolidating your loans into one payment. The goal of refinancing is to lower your interest rate, allowing for more of your payment to go towards the principal of the loan. Consolidating loans allows you to combine multiple loans into one and could also potentially lower your payments as you agree to new terms. It’s important to understand the terms of your current loans, especially if you have federal student loans. Federal student loans provide access to special benefits that you may be ineligible for if you refinance them. If you think you’re paying too much in interest or you have high monthly payments, explore refinancing options as it could help you save money and pay off your student loans faster.
4. Stick to a Budget
One of the best ways to save money without increasing your income is addressing your budget to free up extra money that you may be spending without even realizing it. Even slight changes to your discretionary spending can mean extra money to pay towards your student loans. Below are a few common strategies for tightening your budget:
- Limit dining out and save money by cooking at home.
- Trim down your monthly subscriptions (i.e. streaming services, cable, apps, etc.).
- Shop with a list to avoid overspending.
- Call your phone carrier, insurance provider and any other service provider you may have and ask if they offer any discounts or promotions.
Paying off your student loans early is a lot easier said than done, but following some of the strategies can help get you ahead on your loans and achieve financial freedom faster. Paying off student loans early will take some sacrifice but you’ll reap the benefits once you’re student loan-free.
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