Students take college loans to pay for their degree and get a decent job. However, getting loans is easy but paying them off is difficult because of the lack of revenue streams of a college student.
According to a report by Center for Retirement Research at Boston College, students turning 30 with college debts have lower retirement assets than those without student loans.
If you find yourself sailing on the same boat and wish to clear your debts faster, you may need to set some financial goals and consider the following practical strategies. So, without further ado, let’s check them out.
1. Don’t Stick To Minimum Payments
Paying more than the monthly minimum is one of the quickest ways to clear your college loan before the due date. Since federal and private student loans have no prepayment fees, it may be one of the best ways to pay off your debt.
As an added benefit, putting extra money into the principal loan balance decreases the overall amount of interest you’d otherwise pay over the loan’s existence.
2. Hold On To The Standard Repayment Plan
Unless you specify, the government defaults to a 10-year repayment plan on federal student loans. If you can’t afford to make huge additional payments, sticking to the regular repayment plan is the easiest way to pay off the loans.
Income-driven repayment options are available for federal loans, which can stretch the repayment period to 20 or 25 years. You can also consolidate student loans, which helps you to extend your repayment period up to 30 years, depending on your balance.
If you don’t need these options and can afford to stick with the regular plan, you’ll be on a fast track to become debt-free.
3. Consider Opting For A Side Hustle
One of the best ways to pay off students’ loans faster is to look for additional sources of income and use all that extra money to clear your debt.
Finding the right side hustle can take some tune, but it could be one of the quickest ways to pay off student loans.
There are some amazing freelance marketplaces on the internet that offer a hassle-free and convenient way of making good money.
If you have good content writing skills or a knack for designing creative graphic designs, you can put that talent to use and start offering your service on your desired freelance service.
Simply, sign up on the freelance marketplace, create your profile and a portfolio, and start selling your services.
4. Consolidate Or Refinance Your Student Loans
When you refinance your student loans with a private lender, you’re basically taking a new loan to pay off the old one, so you still end up with a monthly payment.
But there’s a catch. You can save money if the new loan has a lower interest rate than the average rate you were paying on your previous loans—as long as you don’t extend the term.
One thing to bear in mind about refinancing private student loans is that you’ll need a good credit history and you may also be required to bring a co-signer.
5. Sign Up For Autopay
If you don’t feel like refinancing your student loans, enrolling in autopay is another choice for lowering your interest rate. Many private lenders also have an auto-pay option.
The savings from this discount is likely to be minor: For instance, lowering the interest rate on a $10,000 loan from 4.5 percent to 4.25 percent will save you around $144 over the course of a 10-year repayment period.
Now that you know how to pay off student loans faster, it is high time you decide on an option faster and clear all your debts.