One of the worst feelings, when you have student loans, is getting your paycheck and being excited, then remembering that most of your income will go towards your student loan debt. With student loans, it might seem like this feeling could last forever. However, it doesn’t have to. If you want them to go away faster, you’ll need to get a little more aggressive with your student loan repayment strategy.
The good news is to pay off your student loans, that debt doesn’t have to destroy or take over your life. What makes it so scary is feeling like you don’t understand it or don’t have an arrangement plan to pay off your debt. The key is to form a plan for how to pay off your student loans, take stock of your finances and that title loan for bad credit in Las Vegas you still owe, and understand what you’re working with. Small steps can make significant results. Being strategic and regimented about it can be seriously life-changing.
Do Not Default on Your Loans
It’s imperative to note that defaulting on your student loan can have severe consequences. In that fact, not repaying student loan debt can be worse than not compensating other types of debt. Defaulting on your student loans will demolish your credit score, making it hard to do anything like signing up for basic utilities or renting an apartment. Your debt could expand because of accruing interest. The government could also include charges or even garnish your wages if you have federal loans. They can force your employer to withhold cash from your paycheck and send it directly to the government.
Understand Your Loans
Even if your grace period of paying student loan is long gone, the first step in dealing with your student loans is to understand your options.
Sure, it’s simple to make the minimum payments, if you can afford them, but to make an impact, you need to know how your loan works.
Consolidate Your Loans
Loan consolidation is not always the right choice for everyone. But for some people, it can help. Consolidating your student loans means grouping multiple smaller loans into one big one. Consolidation could help lower your payment. If your paycheck or direct deposit shows up weekly or every two weeks, you’re in a great position to pay off that debt early.
You can split your student loan payment that’s due every month and make payments every time you get paid. This saves you some money in interest and will get you in the habit of making regular payments.
Your wallet and bank account are used to being empty, and you’re used to being broke, so it doesn’t give you the stress of making huge payments.
However, if you want to know how to pay off student loans faster, you have to pay more than the minimum. You can also try refinancing your student loans. Much like consolidation, refinancing is the process of getting another lender to pay for your loans and get a more affordable interest rate with them. The difference with refinancing however is you can choose if you want the lender to refinance all your loans or just a single loan.
Enroll in Auto Payments
With auto payments, your bank account will automatically pay your student loans. Believe it or not, there are a few benefits when you enroll in this payment method.
- Your Payments Will Be On Time
Auto-debit will deduct your payments from your bank account automatically on the same date every month. Avoid those hefty overdraft fees by setting alarms on your smartphone or electronic calendar to make sure you have enough money in your account.
- You Might Receive A Discount
It is common for student loan lenders to offer a discount if you do choose to enroll in automatic payments. The most popular discounts include a reduction of 0.25% on the interest rate. You might think that isn’t much of a discount but added up over five or ten years – You’re saving some significant money.
- Ask for Cash Instead of Gifts
Let your family and friends know that if they want to give you a birthday gift or something for the holidays, it would be helpful to you if they gifted you cash. Call the ones you know that send presents every year and tell them your debt situation. They’re your friends and family, and they will understand. So, don’t be embarrassed,
Tax Deductions for Student Loans
Did you know that if you earn less than $60,000 a year and are filing single (if you’re married and filing with your spouse it’s $120,000), you get a $2,500 tax deduction on the interest you paid on your student loans last year? Once you get that refund, you should use that money towards your student loans.