Four Tips to Pay Off your Student Loan Fast
The excitement of graduating college can be just temporary as you think about the student loan you will have to pay. This loan lurks behind each purchase and thought of purchasing a vehicle or a house. If you already know the exact of amount of student loan you owe, you might want to know how to pay it fast. Below is a guide to help you:
Begin your Repayments while you are in School
A lot of students choose to repay their loans when they complete their study and find a job. However, it is a smart move to pay off the loan while you are in school. While you are still in college, try to work part-time and dedicate what you make to your student loan. This can help you pay off the principal early. Contact your loan officer to ensure your payments are deducted to your principal instead of interest.
Create a Budget
You can only manage your finances if you create a budget. Monitoring your income and expenses will provide you with a picture of how much is getting into your pocket and how much you are spending every month. With this, you can evaluate where you might be underspending or overspending. Consider allocating expenses to significantly decrease the length of time you make repayments to your loan. Practicing will surely help you in the long term.
Focus on Paying More than the Minimum
Although your loan terms require you to pay a minimum amount every month, try to allocate something that is more than it. Evaluate your budget to know how much extra you can apply to your principal loan every month. Paying the minimum will only favor your lender since this means you would be paying more interest over time. Try to make regular payments on time through auto-pay and schedule another additional payment for the next day.
Refinance your Loan
Refinancing your student loan helps you get a lower interest rate and bundle your loans into one monthly payment. Your private and federal loans can be consolidated through a private lender. Private lenders usually offer online loans. In case your credit status is good, you can often get a better interest rate. You can also pay off your loan faster by picking a shorter repayment term. But, this would mean giving up protections such as deferment of income-based repayment plans on federal loans, putting you at risk in case you lose your job and cannot afford to repay your student loan for some time.