Student loans can place the squeeze on your finances and may seem overwhelming at times. But you may have more options than you think to reduce this debt. You can reduce your loan debt through sound planning and paying off balances when you can.
To pay off your student loan debt faster, look at other areas of your budget like your car insurance where you can save and combine them with one of the following five strategies.
1. Work with lenders
If you are struggling with low income call your lender to determine if you qualify for a manageable payment plan. There are programs that allow you to pay off your balance for as low as $30 a month, and lenders are often willing to work with you based on your current income status. Also, see if you qualify for a deferment or forbearance, which postpones payments until you have the necessary income to meet loan obligations.
2. Loan consolidation
This is a great strategy if you have multiple loans. Loan consolidation allows you to pay a single monthly payment with a lower interest rate and organizes all of your loans into one more manageable payment. It is also the best payment option if you wish to pay off your loans faster.
3. Bi-weekly payments
This strategy is excellent if you want to pay off your student loans in a hurry, and you are making big bucks. Bi-weekly payments allow you to pay off your total balance much faster, inching you closer to debt freedom. Moreover, bi-weekly payments can save you money when it comes to prolonged payments that include interest rates. With a bi-weekly plan, you can shave years off the lifetime of your loan by immediately deducting available money from your paychecks.
4. Tax deductions
Tax season can be stressful, but you can use it to your advantage if you pay student loan interest. You may qualify for certain tax advantages, and any refund money you realize can be used for additional payments on your loan. While it may be tempting to use your refund for other purposes, remember that every dollar you spend on your student debt translates to less interest you’ll pay in the long-term, saving you more money in the process.
5. Pay off your loans in school
If you are in college and also working a job, consider paying towards your debt now to get a head-start on your debt burden. You may believe you’re too broke to pay toward your balance, but it may be possible to tighten your budget or trim excess spending to make a payment each month. More than likely you will pay a lower monthly balance while in school, and develop the habits you need to manage your assets and debts as an adult.