Repaying student loans can be a very long, intimidating journey. Most students struggle and work very hard to reimburse hefty student loans. Try to imagine this: you are in a new city with new people, a brand new job and a loanworth 100,000 USD on your shoulders. Wouldn’t the entire scenario petrify you and leave you feeling terrified? Luckily, there is good news for you! You can pay back student loans in an effortless and straightforward manner, but only if you have the right amount of determination. Above all, you must have a good repayment plan. This article will help you with this plan and remove a loan worth several thousand dollars from your head.
Before knowing how to repay student loans, you should understand why loans must be repaid. The biggest benefit of loan repayment is that you can save money. For instance, if you have a loan worth 30,000 USD at an interest rate of 4.5% for a duration of 20 years, you will pay an interest rate of 15,550 USD. On the other hand, if you repay the student loan in 10 years, you will have the chance to save at least 8,240 USD. Doesn’t this sound like a lot of money? Secondly, repayment will give you an invigorating sense of freedom. The freedom to spend, travel and live life without any compromises!
Here are few tips to speed up the rate at which you repay student loans.
Method #1 – A Positive Mind, A Determined Heart
First of all, you must have a positive mindset. Always repay your loans with an “I can do it” attitude. And trust in yourself! This might sound crazy; however, positive attitude has real effects. It’s important to remind yourself that you are reimbursing your college loan. Such a mindset will open your path to bigger and better career options.
Method #2 – Learn More About the Loan
Secondly, you should understand everything about student loans and make a discreet reimbursement plan. Use a repayment calculator to gauge how much and when you should make a payment. The calculator will give you an insight into the monthly payment, duration and rate of interest. Moving on, you should pay close attention to entry and exit counselling. These are important sessions that will give you a comprehensive insight into your loan rights and policies. Also, be aware of your loan’s paperwork and details. When you understand your loan completely, you can steer away from many unnecessary complications. Now, you should make a good budget that allocates funds for your student loan properly.
Method #3 – Repay Early
Did you know that you can repay student loans while you are in campus? When you start repayments before graduation, you will have the wit to reimburse at a faster rate. Always remember that the loan’s interest meter will begin while you are in college. Unpaid interest is treated as a capital. The capital is summed up with the balance and a new interest value is calculated.
Method #4 – Engage in Loan Consolidation
Moving on, you should consolidate your loans. This might not be the best choice for everyone; nevertheless, consolidation will definitely lend you a helping hand. Loan consolidation will help you to repay loans conveniently. The unique strategy will extend the reimbursement period and reduce your monthly payments.
Method #5 – Be a Part of Auto Debit Programs
Sometimes, you should enrol in an auto debit scheme. The scheme will reduce the interest value from your bank account automatically. Auto debit has many indispensable benefits. The scheme will make sure you don’t miss a single monthly payment. Similarly, you can make one-time payments and avail hefty discounts.
Method #6 – Ask Your Employer
It is quite interesting to note that some employers are prepared to assist employees with student loans. Companies tend to have established programs that can be utilized when repaying student loans. Teach for America, Nursing Education Loan Repayment Schemes, Military programs and Public Service Loan Forgiveness Programs can be used to repay hefty student loans.
Method #7 – Using Time Wisely
Do you know that you can donate time to save money? Spending some time at the Peace Corps and Ameri Corps will help you save more from your loan payments. In fact, these programs will support you with partial cancellation of additional interests. For instance, Peace Corps will give you a discount of 7425 USD and waive off 70% from the Perkins Student Loan. Likewise, Ameri Corps will help you to save at least 5,550 USD.
Method #8 – Paying a Bigger Sum
Do you know that you can save more by paying a bigger sum every month? Firstly, know how much you should pay every month. Try to pay more than this value! However, for this, you should earn more and spend less. These are simple changes that will help you to pay a bigger sum each month. Similarly, you could shift to bi-weekly payments. According to Investopedia, biweekly payments are better than monthly ones. This is because you will make a total of 26 payments every year. Conversely, you will have the wit to repay your loan faster. Of course, you must make some sacrifices to meet this increased biweekly goal.
Method #9 – Using Tax Deductions
Meanwhile, you can save more by taking advantage of various tax deductions. A recent survey found that individuals with an annual turnover of 60,000 USD can save up to 2,500 USD from their student loan interest. However, the strategy works only for those who repay on time.
Method #10 – Using Reward Schemes and Programs
The virtual platform is filled with reward schemes and programs that will help you to save lots of money from your student debt. These rewards can be converted into cash benefits easily. However, remember to go through the reward’s terms and conditions first. Some might be education specific, while others can be used to settle utility bills and grocery needs.
There are plenty of ways by which you can repay student loans! The ultimate strategy should be decided by you based on your financial capacity and the lender’s policies.