How to pay off your student loans faster: Start before graduation

Your friends, coworkers, family, and relatives might be able to help you. Read our cookies policy. Avoid taking on additional debt until you pay down your student loans. Deferment may also be requested after repayment has begun, but interest may be due during the time the repayment is deferred. You can make some extra money on the side by allowing medical researchers to study you after you take a medication or try out a product for them. Payments under this plan can be fixed or graduated and the term can be up to 25 years.

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Step Two: Understanding Student Loan Repayment

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Early Retirement and Living Well for Less

500 Places That Have the Hardest Time With Student Loan Repayment

Understand that private loans will likely offer fewer options. One of the reasons that federal financial aid is so much more attractive than private student lending is that the government offers all of these possible repayment plans. If you have private debt, you will have to negotiate directly with your lenders, and they may be much less inclined to grant you lower payments or a deferment.

Avoid default if at all possible. For federal loans, at least, the variety of payment, forbearance, and deferment options should allow you to avoid defaulting failing to pay. Talk to your loan servicer, as individual circumstances may vary. You can get out of default by consolidating your loans with the federal government and making three consecutive monthly payments.

Consolidation combines all your loans and revises your payment plan to make your monthly payments as affordable as possible. Of course, this does mean paying more interest in the long run. Alternatively, you can simply start making your payments again. Once you have made nine consecutive monthly payments, you will get out of default. This process is called rehabilitation. Make additional principal payments if possible. Think of your designated monthly payment as the bare minimum.

If you can afford it, you can pay extra without penalty. Doing so will mean that you pay your loan off faster and pay less interest over time. For the best results, ask your loan servicer to apply any additional amount to your principal rather than to future payments.

This will ensure that your money makes more of a dent in your loan balance. Track all of your income and spending for a few months, and then identify expenses that can be cut. You can then funnel this money into student loan payments, including extra principal payments.

Depending on your individual circumstances, this might mean: Try to increase your income. It may sound obvious, but excelling at your job, earning promotions, and working overtime when possible will improve your overall financial picture and allow you to pay off your student loans faster.

When you do find yourself earning more, resist the urge to spend that extra money. If you continue to live as if you were receiving a lower paycheck and funnel the extra cash into extra student loan payments, you could save thousands and thousands of dollars and get rid of your debt much more efficiently.

Look into forgiveness options. Depending on your profession and your other circumstances, you may be able to get some of your debt forgiven. Talk to your loan servicer for specific details on the various forgiveness plans and a complete list of restrictions and eligibility criteria.

In general, though, you may qualify for at least partial forgiveness if: Find out if your employer will help you repay your student loans. Some employers do offer assistance with student loan repayments. Avoid taking on additional debt until you pay down your student loans.

If at all possible, avoid getting a car loan, a mortgage, or any other type of loan until you have made significant progress on your student loan debt. Though it might feel like a burden to postpone buying a new car or become a homeowner, this approach will absolutely pay off in the long run. Include your email address to get a message when this question is answered.

Already answered Not a question Bad question Other. Tips Look for ways to supplement your income. Consider getting a second job, and selling things you do not need. Read the fine print. The most common repayment plans include deferred, interest-only, and minimum in-school payment.

In addition to the greater number of repayment plan options available to federal student loan borrowers, no private student loans offer income-based repayment programs or the option for forgiveness at the end of the repayment term. Also, few private student loan borrowers provide an option to extend repayment to more than 15 years, regardless of the total amount owed. Borrowers who have private student loans do not have the option to change their selected repayment plan after the loans have been dispersed, while federal student loan borrowers may request a change to their repayment program should their financial circumstances or needs change over time.

Overall, there is far more flexibility with federal student loan repayment than with private student loan lenders. Both federal and private student loan borrowers have options when it comes to secondary repayment options, although the methods and advantages to doing so differ between the two categories of lenders. Consolidating student loans is the process of paying off all smaller federal student loans with a large, single federal student loan. The most significant benefit of consolidating is the ability to streamline repayment; instead of paying for multiple loans each month, borrowers have a single monthly fixed payment, based on the repayment plan selected.

While federal student loan consolidation simplifies the repayment process, it does not offer a reduction in aggregate interest rate, nor does it lower the total cost of borrowing.

Instead, the interest rate for a consolidated federal student loan is the weighted average of all the federal student loans included in the consolidation. Borrowers apply for federal student loan consolidation, where they are able to select the federal loans they wish to consolidate, the servicer of the new loan, and the repayment plan that best fits their financial needs. Federal consolidation loans are eligible for all of the repayment programs listed above.

Student borrowers with either federal student loans or private student loans may go through the process of refinancing with the help of a private lender. Refinancing student debt is similar to federal student loan consolidation in that borrowers take on a large, single loan in replacement of several smaller loans. However, unlike federal student loan consolidation, refinancing is only available through a private lender and all student loans are eligible.

Private student loan lenders make refinancing available to well-qualified borrowers, which means there is a review of income, credit history and score, and other factors that show the borrower is a low risk to the lender. While refinancing federal or private student loan debt helps streamline the loan repayment process, borrowers are required to repay the loan based on the terms agreed upon at the time the funds are received.

There is no option to change the repayment plan for refinanced student loans unless another refinance takes place. Borrowers also lose access to loan forgiveness available for federal student loans when they refinance with a private lender. This means that no payments are due until a student leaves half-time status and after a grace period, typically six months, passes.

Once the deferment period ends, principal and interest payments are due until the loan is paid off or the balance forgiven. Deferment may also be requested after repayment has begun, but interest may be due during the time the repayment is deferred. Applying for deferment is done directly through the loan servicer, and it may extend for up to one year.

Forbearance is similar to deferment in that it temporarily halts payments due on an outstanding federal student loan. However, borrowers are responsible for any interest that accrues on any federal student loan while it is in forbearance. Some private lenders may also offer a reprieve from payments but only when a borrower can show severe financial hardship.

Once the forbearance period ends, full principal and interest payment resume. Neither forbearance nor deferment count as default on a student loan which is incredibly beneficial for borrowers who may experience unexpected unemployment or a significant decrease in income for a period of time. However, it is important for borrowers to understand that these temporary stops to monthly repayments will extend the life of the loan and increase the total cost of borrowing.

Individuals who face an overwhelming amount of consumer debt may have some recourse through bankruptcy protections made available through federal law. Unfortunately, filing for bankruptcy leaves credit severely damaged for no less than seven years after the debts are discharged, making it difficult to secure new debt for a home, a vehicle, or a credit card in the future.

While student loan borrowers may think bankruptcy is an answer to getting out from under the weight of federal or private student loans, rarely is bankruptcy an option to discharge student loan balances. The only way for federal or private student loans to completely vanish through the bankruptcy process is for a borrower to prove undue hardship.

In the eyes of the court, this means the following has to be shown:. If these factors are true, the first step in filing for bankruptcy is finding an experienced lawyer. There are several online resources that make the search for a qualified lawyer easier, but it is important to work with someone who earns their fees.

Once a lawyer is secured, student loan borrowers will select the type of bankruptcy they want or are eligible to pursue, and then follow the steps the lawyer outlines to go through the process. Bankruptcy is not an easy way out of student loan debt, but it is an option for those who can prove undue financial hardship made worse by student loans. Expediting student loan repayment starts with finding realistic methods to pay more toward the principal balance of the outstanding loans.

This works to reduce the interest owed over the life of a student loan and speeds up the repayment timeline significantly, depending on the extent to which extra payments are being made. The challenging part of paying off student debt quickly typically revolves around finding the extra dollars each month to pay down the principal balance. Here are a few tips on how to accomplish that daunting task. In either case, employees should look to their employers for student loan repayment benefits and take advantage of what is offered.

It is, however, important to read the fine print — some companies will expect a commitment to continue employment for a number of months or years after accepting a student loan repayment benefit. Payments made on behalf of an employee by an employer may also be taxable as income. Take time to understand these nuances before student loan repayment assistance is accepted. One of the more challenging methods to speed up repayment of federal or private student loans is to evaluate monthly living expenses and reduce them when possible.

Moving in with mom and dad may not seem all that appealing to most student loan borrowers, but having a reduced housing expense each month could make a substantial difference in how much extra is available to pay toward student debt.

Reviewing desired expenses, such as dining out, entertainment, clothing, or travel, and minimizing how much is spent in each category also helps uncover the extra dollars that can be used toward paying down the principal balance on student debt.

A common pitfall that stands in the way of paying off federal or private student debt earlier is the accumulation of interest over time. When interest rates are high on student loans, paying only the minimum amount due may mean the principal balance is not moving down very quickly, if at all, with each monthly payment.

Reducing the aggregate interest rate on student loan debt can help solve this problem. Consolidating federal student loans does not provide a reduction in the interest rate applied to the new, larger loan because the weighted average interest rate of all consolidated loans is used to determine the final rate. However, refinancing federal or private student debt may offer an opportunity to reduce the interest rate, allowing more of the monthly payment to apply toward the principal balance.

Each private lender offering student loan refinancing has varied interest rates, depending on the credit history and score of the borrower and co-signer, if applicable. Those with the best credit will qualify for the lowest possible interest rate. In some cases, borrowers may also be able to shorten their repayment period. While this results in a higher monthly payment, it will reduce the amount of time it takes to repay the loan. Some borrowers may be lured by the variable interest rates offered by private lenders since they are often lower than the fixed interest rates available.

It is important to recognize that variable interest rates may increase over time, creating a higher cost of borrowing. Refinancing federal or private student loans can be a smart method to reduce the cost of interest but only when these caveats are fully understood. In addition to cutting living expenses and refinancing for a shortened repayment period or lower interest rate, student loan borrowers can search for ways to earn extra income which can then be applied toward outstanding student debt balances.

Likewise, signing up to offer rideshares, picking up a part-time job two or three evenings a week, or offering to do paid tasks for neighbors, family, or friends can all generate an additional few hundred dollars each month. Taking those excess funds and putting them directly toward student debt can knock off months if not years of payments by reducing the principal balance and ultimately, the interest. Shortly after the euphoric sense of accomplishment students feel when they graduate college, a stark reality sets in.

They must soon start repaying student loans. Many will likely be repaying their debt well into their 30s. In addition to having student loan debt, recent graduates face expensive housing costs, entry-level wages, and a stagnant job market once they enter the real world. These places are both affordable and have well-paying jobs - a great formula for successful repayment. The necessary data was compiled from the U.

Census Bureau and the Bureau of Labor Statistics. This may be beneficial to those who have had difficulties or bad experiences with their old servicer. This one is simple and guaranteed to expedite your repayment and save you money, if you can do it. All you have to do is take your monthly payment and divide it in 2. Then, pay this new amount every 2 weeks instead of only making 1 payment a month.

Well, there are 52 weeks in a year. If you are making a payment every other week, then you end up making 26 payments - or 13 full monthly payments. If you have multiple student loans, it is always smart to pay off those with the highest interest rate first because these loans will have the most amount of money capitalizing. Though all loans typically have a minimum payments, any extra money you can put towards student loans should go to those with the highest interest.

Another simple way to save money is by taking advantage of interest rate reductions. The most common reduction is by signing up for auto-pay. In this scenario, your servicer will automatically take out your payment from your bank account. In-turn, borrowers are usually given an interest rate reduction of 0. Other interest rate reductions vary lender by lender. Arguably the most important step with anything involving money is to create and follow a budget. Creating a budget will allow you to have a better insight on how much money you have to put towards essentials, entertainment, and your debt.

Furthermore, creating a budget will allow you to determine which of the various student loan repayment plans and benefits may be the best for you. When creating a budget, you should first take out the absolutely necessary expenses such as housing, food, and medically related things.

After that, you should then prioritize paying off your debt. Only after all of that has been accounted for, you should budget out money for entertainment and luxuries.

For an even faster pay off, considered temporarily cutting out more luxuries. Employer student loan repayment assistance is growing in popularity as far as benefits go. In short, employers who offer the enticing benefit will pay a certain amount of money towards employees' student debt each month. By working for a company that offers this benefit, you can not only receive help paying down your debt, you can also pay it down much faster.

If you can afford it, try to still make the minimum monthly payment yourself, then use the employer assistance to help pay down the balance. Using this benefit, along with making payments yourself, could cut the amount of time it takes to repay your debt in half, or more, and can save you thousands of dollars over the life of your loans.

There are many federal student loan repayment programs that allow you to extend your repayment term. These include graduated repayment plans, extended repayment plans, income-driven repayment plans, and more.

Though these can help in times of financial hardship, in general, it is best to avoid these plans if possible. By extending your repayment term, you will pay down your loans less quickly and you will end up paying more in interest over the life of your loan. If you attended an eligible higher education institution which is most colleges and universities in the U.

A cash windfall is essentially when you receive a large sum of money at one time, typically unexpectedly. This could be a bonus at work, an inheritance, lottery winnings, money from a legal settlement, or many other things. If you are lucky enough to receive a cash windfall, you would be wise to put at least some of that money towards your student debt. One of the other main benefits of federal loans is that you are eligible for forgiveness.

In short, forgiveness excuses you from making any more student loan payments and you are not responsible for your student loans once granted forgiveness. Sounds too good to be true, right?

There are various eligibility requirements and only a select group of individuals can have their loans paid off by the government. We will go over the various programs below.

But first, it should be noted that most people do not qualify for these programs, and you will still have to make payments for a long time before receiving forgiveness.

Public Service Loan Forgiveness PSLF - This program forgives you for your loans after you have made qualifying monthly payments while working for an employer for at least 30 hours per week. Eligible employers include a government organization including the military and nonprofit organizations. Eligible loans include any Direct Loan. Perkins educational loans may be discharged through the Perkins Loan Cancellation program, however,. Other reasons for forgiveness - Other times in which student loans may be forgiven include in borrower disability or death, bankruptcy, school closing, false loan certification by the school or by identity theft.

However, these options are fairly raw and should not be a core component of your pay off strategy. If you enter into the military with some student loan debt, you may be able to pay it off using the GI Bill or another form of relief, such as military student loan forgiveness. Typically, you will need to commit to a certain number of years in the active military and, in turn, they will help pay down your debt.

There are a few different programs , each with varying amounts of assistance, so be sure to do your research before signing up. While you may have a job, you probably do not have a lot of extra cash to send to the government to pay your loans down. Have you thought of some odd ways to pay for your student loans? If you have never heard of selling your plasma, you are in for a treat. A number of medical clinics allow you to come in on a regular basis to sell it.

They will take blood from your body and then single out the plasma. You are paid for it every time you go.

If you want to knock off a chunk of your student debt, you could hold a yard sale. You can ask for some donations or go around picking up unwanted items from other people.

You may not make a fortune, but you can easily make a couple hundred bucks one weekend. If you are independent, living with your parents could be a difficult way to pay off your student loans, but why not. Whether you are 22 or 32, living at home can help you save a bunch of money and you will be able to put it towards paying off your student loans. When it comes time to grocery shop, you will find that leaving meat out of your cart and in the meat cooler results in less money you have to shell out.

You can cut back on some of your favorite foods and opt-in for ramen noodles for a few months while you pay down your loan debt. Of course, you may think that you cannot live without them, but you can. While your dream may not be to open your own company, you can earn a decent income by starting a service-oriented business such as a landscaping company or a cleaning business.

The money you earn can be placed toward your student loan debt and once it is paid off, you can venture out and do your own thing. There are many positions you can hold in the entertainment business from being a comedian to working as a clown and entertaining kids.

You will be able to pay money towards your college loan debt while having fun at the same time. If you have never participated in a clinical study before, now is the time.

You can make some extra money on the side by allowing medical researchers to study you after you take a medication or try out a product for them. Sometimes, the studies pay quite a bit of money and you can make a couple hundred bucks each time.

Many students hustle hard to pay off their student loans because they do not want it looming over their head and who blames them? Student loan debt can be with you for a while, unless you pay it off relatively quickly. The Standard repayment plan is set at 10 years, so unless you plan to hustle, you can expect to spend 10 years making consistent payments to your student loan servicer.

Before you can hustle to pay off your student loans, you need to know how much you owe. If you can only guesstimate your debt, then you need to gather your paperwork, make some calls, and start finding out the real numbers. It is not uncommon for grad students to graduate with a hefty amount of debt, sometimes in the hundreds of thousands.

While you pop your eyeballs back into place, try not to panic too much. There are ways that you can manage your debt, but be prepared to make some sacrifices. If you do not make much money throughout the month, this could be half your payment.

One of the first things you should do when your monthly amount is too high is call your loan servicer. You may be able to extend your payment plan or apply for another repayment plan based on the amount of money you make. These plans will help bring your payment down a bit but will not help you pay off your debt more quickly. One thing you MUST remember is not to give up on paying your loans quickly, as long as it is financially feasible, and to never feel discouraged. While it may be disheartening looking at the bill each month, remember you are working toward a goal.

Once you begin to see your progress, you will be motivated to keep it up. This is also where the additional payments come into play as you will notice the loan balance decreasing much more quickly.

You must keep a positive attitude because, after all, you did want to go to college and get the degree you got, so only you can blame yourself for the debt you are in. If you ever find yourself in a position where you cannot afford your loan debt, speak with your loan servicer as there are other options to help you. Keep in mind that the more you sacrifice now and put toward your loan, the sooner you will be free from the clutches of debt. That means, you should apply bonuses, tax returns, and additional money you make directly to the loan.

One of the benefits of doing so is that you can choose which loan you want the extra money to go to, therefore, you will be able to pay off one or two of your smaller loans quicker and then tackle the larger one. Student loan debt can be frustrating at times, but the more you work, the more you hustle, and the more you sacrifice will help you get to the end result quicker. You just found out that you have to start paying back your student loans.

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