The financial side of getting a college education is always a challenge. Aspiring dreamers get off with the use of student loans. But when it’s time to leave the university, you also want to end everything that comes along with it like your student loans.
Many feel that repaying student loans when you are already starting to be a full-time earner can be very inconvenient and distracting. Remember: this is a responsibility that you have to keep. To help you with the challenge, here are 10 ways you can accelerate student loan repayment.
Plan your finances.
While seemingly simple, planning finances can be difficult even for adults in their latter years. Technically, finances can be managed by applying basic accounting law of not spending beyond your income. Take the time to seat and write your regular, stable monthly income such as your salary. Don’t push it by considering freelance or consultancy projects you get from time to time as these aren’t secured forms of income.
Next, list down all your mandatory expenses including the loans you have to pay on a monthly basis. Everything also means gas, cab fare, snacks, groceries, etc. This alone gives you a good idea of how you should be managing your expenses. Cut down on expenses that you think you can limit. Allot money for student loan repayments every month.
Never miss due dates.
Missing out on a repayment is equivalent to earning interests after interests and penalties. While you’d think that these are manageable amounts, you might be doing the calculations wrong. Missing a payment once gives you license to miss it for the second, third and so forth time. Be stricter with your finances by paying everything on the dot.
Pay more than what is due.
There are certain times when money is easier to come by. Say you accepted a freelance gig and you got paid for it early. Use part of that extra income as ADDITIONAL payment for your student loan. That month’s payout should be composed of the minimum amount due (one which you’ve ideally saved for already) + additional payment you got from the extra income. It might seem like a downer but you’ll enjoy its benefit in the long run.
Sign up for automatic repayments.
Your bank account might have automatic loan repayments or bill payment feature. Consider signing up for this free service so the loan would automatically be paid on the schedule you elect. The upside is that there’ll be more pressured to ensure that you have enough money on your account to pay for the student loan.
Have an exit loan counseling at your school.
Some universities and colleges have exit loan counseling for their graduating or exiting students. Financial counselors help you manage your debt better. The best part of it is that you’ll learn many strategies to lessen or repay your loans on time. Never put aside the advantages of such free services.
Talk to your lender/s.
Student loan lenders have heard it all. They know people deal with seriously difficult times. Talk to your lenders to get a better repayment agreement. Most lenders provide loan restructuring plans to give their borrowers more room. Update them of your financial status and your impending inability to pay the loan beforehand. Their representative would be able to help you avoid multiple penalties.
Consider consolidating loans.
A consolidated loan provides you the convenience of paying one big loan instead of several small to medium ones. The upside is that you will just be responsible for one due date on a regular period. Student loan consolidation is based on the current credit score of the borrower.
If you’re credit rating has improved because you’ve been paying bills on time, and you got a stable job, it’s very likely you’ll be able to negotiate better and more manageable interest rates. Note though that federal and private student loans can’t be merged into one consolidated loan.
Check if you’ll qualify for student loan interest deduction.
There is a possibility of getting discounts on interest rates when you pay your federal income tax. Depending on the case, one can get as much as $2,500 for student loan interest deduction every year. This would fall in your exclusion from regular income declaration. However, this possible benefit is limited to the borrower’s own tax return. See if you can avail of such perks.
Look for partial loan cancellations.
The Federal Perkins Loans Program provides borrowers with payment deferment and partial loan cancellation opportunities. Partial loan cancellations are given to qualified borrowers like full-time public teachers in low income students area, nurses, medical technicians, law enforcement officers, and military personnel. Contact the university where you got your loan to get further details.
Stop using plastic.
Many individuals get buried in bigger debts because they have this strong and unplanned urgency to use their credit cards. Stop the urge by looking at the bigger picture. Also, reconsider paying your loans through credit cards. It’s likely that these plastic money options have higher interest rates hiding under the guise of convenience.
Manage your finances well by setting your eye on student loan repayments. It’s the only way you can free yourself from the risks of further financial difficulty. Last but, not the least, do continue to save for emergency fund while repaying debt. Its good to be prepared for an emergency by having saved for it. Here’s tip on preparing for emergency financial situation.
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