The topic of student loans is one of the most debated topics in the world of education today. It’s the reason why people choose not to pursue higher education, and why others spend years struggling to pay off their student loans. At this point, over 44 million Americans owe $1.5 trillion in student loan debts collectively.
However, even though it might be essential for you to take a loan to pay for your college expenses, this doesn’t mean that you have to drag that debt with you for decades. If you know the right approach and take the right steps, you can pay off the student loans within a few years.
I actually managed to pay off a great portion of my student loan by doing freelance work while at school. I did some tutoring, provided some assignment help for those who didn’t know how to write an assignment, walked some dogs and babysat some babies. After I graduated, I found other ways to keep paying off my loans. A few years later, I was debt-free, and so can you!
1. Whenever Possible, Make Extra Payments
It’s easier said than done, I know. When people used to say: why don’t you make more than the minimum payment, I was frustrated. However, every once in a while, I found myself having some extra money. Instead of spending these, I invested them all into my loan.
You wouldn’t believe what kind of a difference a couple of extra payments can make when it comes to student loans. They change your balance, but can also affect the tax refund, your credit score, not to mention how handy this comes when you get yourself in a small financial crisis.
When you’re investing your barely saved money into this without having to do so, it can feel a bit painful. I did want to spend them shopping or going out, but with a couple of years of doing this, I achieved what most don’t in decades – I’m debt free. By paying ahead, I saved money in interest.
To make your loan payments easier, you should divide the payment into two. This will help you manage your budget, especially if you’re doing some freelance work on the site or get the pay check weekly. Also, if you split your payments in two weeks, you’ll end up with 13 months worth of payments instead of 12, giving you a much nicer payment schedule.
3. Automate It
Automation was my biggest friend when it came to student loan payments. If you have too much to tackle and don’t have the time to worry about this, you can always sign up for auto pay. This way, you won’t forget about your payments ever, therefore maintaining your credit score high.
If you manage to keep a good credit and have a nice, steady income, you might be eligible for refinancing of your student loans. Basically, you’ll be taking out a new loan to pay off the first one. This will give you lower interest rate, a new term length, or maybe even both.
For example, if you’re doing well at work and earn more than your monthly payments require, you can ask for refinancing and reduce your 10-year loan to 6-year loan. Yes, your monthly payments will be bigger, but you’ll pay off that loan much, much faster. Also, you’ll save money on interest.
5. Do Some Job On the Side
The mistake that most students make when it comes to paying off their loans is that they wait until they graduate to earn money. Yes, you will earn more with the degree and yes, you’ll be able to get refinancing later. But, this doesn’t mean that you can’t do some jobs on the side while studying, too.
In fact, this was the biggest reason why I was able to pay off my loan so fast. Since I was sometimes paying for help with starting an assignment, I realized that I can be making money this way, too. So, I learned how to write a report type assignment, and I started working freelance for other students. I did other errands too, and so can you.
6. Find a Company that Offers Repayment Assistance
Once you graduate and obtain your degree, you can search for a company that helps employees pay student loans. Some companies offer this as a benefit, and some even go as far as paying off your entire loan in return for your loyalty to them. You might have to sign a contract to work for them for a certain amount of time, but if they pay you for it and pay off your loan – it is a win-win.
Not many companies offer this today, at least not with your level of experience, but you should definitely try. If this doesn’t work, a nice company with a hefty salary will definitely do the job, too.
Student debts are exhausting and frustrating. The sooner you get rid of them, the better. So, instead of aggressively paying them or despairing over the amount you have to deposit, take smart steps to pay off your loans as early as possible.
Ray Campbell is a financial advisor with a Master’s degree in Economics. He explores the economic market for best ways to handle finances, grow a small business, as well as pay off loans. In his articles, you’ll learn about the best financial tips known in the industry.