- 8 Tips For Paying Off Student Loans Fast
- 8 ways to pay off your student loans fast
- 1. Make additional payments
- 2. Establish a college repayment fund
- 3. Start early with a part-time job in college
- 4. Stick to a budget
- 5. Consider refinancing
- 6. Apply for loan forgiveness
- 7. Lower your interest rate through discounts
- 8. Take advantage of tax deductions
- How long should it take to pay off student loans?
- Types of repayment plans
- Why pay off student loans fast?
- Is it worth it?
- Learn more:
- How to Start Paying Student Loans After College
- Know how to make student loan payments
- Start paying student loans early to save money
- Lower your payment if necessary
- Track loan forgiveness eligibility
- 11 Strategies to Pay Off Student Loans Fast
- 1. Pay more than the minimum payment
- 2. Avoid certain repayment plans
- 3. Use your job to your advantage
- 4. Consider refinancing your student loans
- 5. Take advantage of tax deductions and credits
- 6. Enroll in autopay
- 7. Start a side hustle
- 8. Cut from your budget
- 9. Make extra payments whenever you can
- 10. Make bi-weekly payments
- 11. Pay off capitalized interest
- Stick with it and you’ll finally pay your student loans off
- 5 Steps for Student Loan Success
- 1. Find as much “free” money as you can
- 2. Look into federal loans
- 3. Make sure you know what’s happening with your loans at all times
- 4. Make your student loan payments on time
- 5. Pay more than your minimums
8 Tips For Paying Off Student Loans Fast
While some may argue that you can’t put a price on a good education, many of today’s graduates face the grueling task of paying off student loans within a reasonable time frame. However, if you’re feeling overwhelmed by student loan debt, there are a few ways to pay off student loans quickly.
8 ways to pay off your student loans fast
Some of the best ways to start paying off your student loans faster include:
1. Make additional payments
If you can afford it, make larger payments to cut the principal more quickly. By diminishing the principal balance, you’re minimizing the duration of the loan period and the interest accrued.
For example, a $25,000 student loan with 6.8 percent interest and a 10-year payback period would cost $288 a month. Paying $700 a month instead of $288 enables the borrower to repay the loan in just over three years.
Another strategy is adding payments and sending in checks every two weeks rather than monthly.
“Just be sure to advise your loan servicer to apply your extra payment to your principal balance, rather than placing your account in a ‘paid ahead’ status,” says Jessica Ferastoaru, student loan counselor at Take Charge America. “This will allow you to pay down your principal balance more quickly, and save money on interest.”
Takeaway: Making larger payments will help you cut through the principal more quickly, which will allow you to pay off your loan sooner.
Next steps: To realistically determine how large your loan payments can be, consult your budget and see where you may be able to reduce spending in order to accommodate larger loan payments.
2. Establish a college repayment fund
Another great approach to paying off student loans quickly is placing your money into an account you can’t easily draw from with the swipe of a card. Having money moved automatically into savings is effective because it’s forced. It enables people to set aside money to grow what otherwise would be spent on clothes or dining out.
Just make sure to set up an account that will be used only for paying back your college debt. Don’t use checking or savings accounts you already have, because you might use that money for something other than your student loan. Compare savings accounts and put your money in an account with a higher yield to maximize your savings.
Takeaway: Setting up an account specifically for your student loan repayment funds can be a great way to compartmentalize your finances. It can also help you control out-of-budget spending, allowing you to potentially make extra payments.
Next steps: Research savings accounts with high yields, then contact your preferred bank to set up your new account specifically for student loan savings.
3. Start early with a part-time job in college
Getting a part-time job while attending college is one way to keep college debt in check because it generates money you can use to help offset student loan debt.
Say you’re able to work a part-time job that allows you to put away $500 a month. In a year, that’s $6,000 you can put toward paying off student loans.
Takeaway: If you’re able to properly manage your coursework and a part-time job, a job can allow you to create a student loans savings account.
Next steps: Check your school’s resources or career center to see if they are hiring for any on-campus jobs. Typically, on-campus jobs are more understanding of unusual or busy class schedules.
4. Stick to a budget
Not knowing how to manage finances properly can prevent students from paying off their loans quickly and, as a result, delay more fulfilling life investments. By carefully planning and fully understanding your monthly cash flow, you can make some necessary sacrifices and avoid falling off the budgetary wagon.
“If you’re trying to pay down your student loans faster, one of the best ways to reach your goal is to develop a budget,” says Ferastoaru. “If you are able to meet a savings goal each month by sticking to a budget, you can use this money saved to pay down your student loans.”
Takeaway: Your financial health and spending habits can greatly impact your ability to pay off your student loans — be diligent about sticking to a budget during your repayment period.
Next steps: Do an assessment of your spending habits and your ability to keep a budget. If you find it hard to keep a solid budget as a college student, use our student budget calculator to help you get — and stay — on track.
5. Consider refinancing
If you’re not sure how to pay off student loans quickly or if it doesn’t seem feasible, you may be paying too much interest.
That’s where you might consider refinancing your loan into a better rate or a shorter repayment period. While refinancing federal loans with a private lender will cause you to lose some federal benefits, it could make paying off your loans more achievable.
Remember, however, that timing is key. Your credit score is typically going to be at its lowest immediately after graduation, which generally means that the interest rates you’re offered will be higher.
“It takes a few years of repaying your debts responsibly, by the due date, for your credit scores to improve. You also need to have a steady job,” says student loan expert Mark Kantrowitz.
“Shop around for the loans with the best rates.
The best advertised rate is not necessarily the rate you will be offered, so you may need to apply for several loans to see which lender gives you a better deal.”
Takeaway: If you’re overwhelmed by the prospect of paying down your loans quickly, refinancing may be a good option. While it’s not for everyone, refinancing can help you score a lower interest rate or different repayment terms.
Next steps: Before applying, compare offers from multiple lenders to determine if refinancing will save you money in the long run.
6. Apply for loan forgiveness
Forgiveness programs can eliminate all or part of your student loan debt, but each program has unique requirements and strict approval standards.
Perhaps the most well-known program is Public Service Loan Forgiveness (PSLF).
In order to be eligible for this program, you must be employed in a public service position by a government or nonprofit organization and make qualifying payments under an income-driven repayment plan for 10 years. Getting approved for the program is notoriously difficult, so read through the details carefully to make sure you’re on track.
The Teacher Loan Forgiveness program is another option. In order to qualify, you must have an eligible loan under the Direct Loan Program or FFEL Program and teach full time for five consecutive years in a low-income school or educational service agency. In addition, at least one of those years must have been after the 1997-98 academic year. The program forgives as much as $17,500.
It’s also possible to have a portion of your student loans forgiven if you’re on an income-driven repayment plan. Once the 20- or 25-year repayment term ends with these programs, any remaining balance may be forgiven.
Takeaway: If you’re willing to work in a specific occupation and adhere to a variety of other program requirements, it may be possible to get a substantial portion of your loans forgiven, potentially saving you thousands of dollars.
Next steps: Be sure to do your research thoroughly if you hope to qualify for a forgiveness program, particularly a complex program PSLF. You’ll want to make sure that you’re making qualifying payments and are employed by an eligible employer.
7. Lower your interest rate through discounts
Even if you’re quoted a high interest rate, you may be able to lower your rate in other ways. For one, most lenders will offer a 0.25 percent to 0.5 percent discount if you set up automatic payments on your loan.
In addition, private lenders may offer other interest rate discounts if you meet certain criteria, such as making a certain number of on-time payments or taking out another loan with the company. If you have private student loans, ask your lender about any opportunities for interest rate reductions or discounts.
Takeaway: It may be possible to reduce the interest rate on your existing loans by setting up autopay or asking about loyalty discounts.
Next steps: Contact your lender to inquire about the various rate discount programs that may be available.
8. Take advantage of tax deductions
The federal government offers a student loan interest deduction on your taxes for interest paid during the year on qualified loans. The law allows you to deduct up to $2,500, depending on your adjusted gross income.
You can claim this tax deduction if you’re legally required to pay interest on a qualified student loan and your filing status is not married filing separately. There are also adjusted gross income limits, which are set annually, for this program.
Those who qualify for the deduction will generally save a few hundred dollars on their income taxes, which could help with student loan repayment. “If you pay less in taxes, this could free up some extra money to pay down your debt. It’s a good idea to speak with a tax advisor to make sure you’re taking advantage of any relevant tax benefits related to your education,” says Ferastoaru.
Takeaway: The student loan interest deduction allows for deducting as much as $2,500 in interest paid on federal and private student loans. It can be helpful to use the savings you receive through this deduction to pay down your education debt faster.
Next steps: Confer with a tax adviser to find out whether you’re eligible for any tax credits and make sure you are not missing this potential opportunity.
How long should it take to pay off student loans?
It typically takes between 10 and 30 years to pay off student loans, but the time frame varies by individual and is impacted by several factors, including the loan interest rate, the total balance owed, the borrower’s annual income and the repayment plan.
“If your total student loan debt at graduation is less than your annual income, you should be able to afford to repay your student loans in ten years or less,” says Kantrowitz. “The average student loan repayment term, however, is 16 years.”
Types of repayment plans
The choice of repayment plan has the greatest influence on how long it will take you to eliminate student loan debt, Kantrowitz says.
For most federal student loans, the standard repayment plan is 10 years, though it’s possible to select a longer repayment horizon. Options include extended repayment, graduated repayment and income-driven repayment.
Extended repayment offers repayment terms of up to 25 years, while the graduated repayment plan offers timelines of 10 to 30 years, with payments beginning low and increasing every two years. This option is designed for borrowers whose income may be low now but is ly to increase regularly.
The repayment timeline for income-driven plans is generally 20 to 25 years, depending on the specific option you chose. There are several income-driven repayment choices, including Revised Pay as You Earn (REPAYE), Pay as You Earn (PAYE), Income-Based Repayment (IBR) and Income-Contingent Repayment (ICR).
Why pay off student loans fast?
Paying off your student loans quickly can be beneficial to your financial health in many ways. By doing so, you’ll be able to save for retirement sooner, improve your credit score and avoid interest accrual.
“Paying off your student loans faster also means you’ll pay less in interest, so if you want to save money, it’s a good idea to pay off your student loans sooner rather than later,” says Madison Block of American Consumer Credit Counseling.
This is especially true now, as interest rates on federal student loans are now waived through Jan. 31, 2021. This is a great chance to make progress on paying down the principal on your student loans without having any interest accrue.
There are exceptions to this rule, however. For instance, if you plan to pursue any sort of loan forgiveness, it may actually benefit you to only make the standard or minimum monthly payments and nothing extra. Otherwise, you may pay off your loans before you qualify for loan forgiveness, which forgives any remaining balance on your loans after you’ve made 120 qualifying monthly payments.
Is it worth it?
Paying off your student loans quickly can certainly be worth it, but only if you’re financially prepared.
In order to avoid putting yourself in a less-than-desirable financial situation, you’ll want to have your finances in order and have a financial plan in place.
Before you start paying down your student loans, take a look at your budget to make sure you can afford extra payments without ending up with more debt — paying back more than the monthly minimum on your student loans isn’t wise if it causes you to miss credit card or mortgage payments.
It also may not be worth it if you are dealing with other forms of debt, particularly high-interest debt. If you have a credit card balance with an interest rate of 16 percent, for instance, it makes more sense to put extra payments toward that account rather than toward a student loan with 5 percent interest.
How to Start Paying Student Loans After College
The most important thing to know when you start paying student loans is when your payments are due. Repayment begins when your student loan grace period ends, typically six months after you graduate or leave school.
» MORE: Student loan repayment options: Find the best plan for you
Making that first payment on time will put you on track for success. But taking some additional steps right away can also help if you want to do any of the following:
- Pay your loans off faster.
- Lower your monthly payments.
- Qualify for loan forgiveness.
Here’s how to start repayment on the right foot.
Know how to make student loan payments
Your lender will ly work through a student loan servicer that you’ll pay directly. You can manually pay your loans online or with a check, any other bill. But autopay is especially beneficial for student loans because you’ll usually receive an interest rate discount of one-quarter of a percentage point for signing up.
Autopay lets your servicer debit the monthly payment from your checking account automatically. By enrolling in autopay, you won’t forget to make a payment and fall behind by accident. Just make sure there’s enough money in your checking account each month to avoid overdraft fees.
You have to repay your loans even if you don’t receive a bill. Because you ly moved after finishing school, check that your servicer has up-to-date address and contact information.
Not sure who your servicer is?
The federal government employs several student loan servicers, including FedLoan, Navient and Nelnet. If you’re not sure who services your loans, you can find out by using the government’s central student loan database, the National Student Loan Data System.
» MORE: How to switch student loan servicers
Start paying student loans early to save money
You pay more interest at the beginning of your repayment term than you do later on. If you want to limit the amount you repay, committing to certain strategies when you start paying student loans can maximize your savings.
- Make extra payments. You can pay student loans off faster by making larger automatic payments or biweekly payments. By paying half the amount you owe every two weeks, you’ll make 13 full payments by the end of the year, rather than 12. Or you can make a full extra payment every two weeks and conquer your loans in half the time.
- Refinance at a lower interest rate. Once you have a solid income, refinancing can save you money. To get the best interest rate, you or a co-signer will need solid income and a credit score in at least the high 600s. There’s little downside to refinancing private student loans. You can also refinance federal student loans, but it will cost you benefits such as income-driven repayment and loan forgiveness. You’ll want to be comfortable giving these up.
» MORE: When to refinance student loans
Lower your payment if necessary
You may know right away that you can’t afford that first bill when it arrives. Instead of ignoring your loans, talk to your servicer about paying less with an income-driven repayment plan.
» MORE: Income-based repayment: Is it right for you?
Income-driven repayment plans cap payments at 10% to 20% of your discretionary income and can be as low as $0. After 20 or 25 years of eligible payments, your remaining balance is forgiven, though that amount is taxable. Switching to an income-driven repayment plan early can ensure every payment you make counts toward forgiveness.
» MORE: Can you change your student loan repayment plan?
Track loan forgiveness eligibility
If you enter the workforce with a government job or at a nonprofit, you may qualify for Public Service Loan Forgiveness. PSLF eliminates any remaining federal student loan debt you have after you make 120 qualifying payments.
When you start paying student loans, do the following to ensure all your payments will be eligible for this program.
Make sure you have the right loans. Only direct loans qualify for Public Service Loan Forgiveness. You can consolidate Federal Family Education Loan Program or Perkins loans to make them eligible, but only payments on the new direct loan will count toward the 120 needed for forgiveness.
Certify your employment. After you complete a year of eligible employment, submit an Employment Certification Form to the Department of Education. Once the government confirms that your work is for a qualifying employer, your student loan servicer will change to FedLoan. You’ll then want to resubmit that form annually or if you change employers.
Choose an income-driven repayment plan. Only payments made under the standard repayment plan and income-driven repayment plans count for Public Service Loan Forgiveness. Since the standard plan pays off your loans after 120 payments, you’d have nothing left to forgive once you qualified for forgiveness. Apply for an income-driven plan instead at studentaid.gov.
Teachers and Perkins loan borrowers have additional federal student loan forgiveness options. Understand the requirements of these programs before you make your first payment as well to ensure you’re on track.
» MORE: 10+ student loan forgiveness, cancellation and discharge programs
11 Strategies to Pay Off Student Loans Fast
Our goal is to give you the tools and confidence you need to improve your finances. Although we receive compensation from our partner lenders, whom we will always identify, all opinions are our own. Credible Operations, Inc. NMLS # 1681276, is referred to here as “Credible.”
The most effective way to pay off student loans fast is to pay more than the minimum payment in any way you can. The more you pay down the principal balance, the less you’ll pay in interest overall.
Here are 11 creative payoff strategies to help you pay down your student loans faster:
1. Pay more than the minimum payment
The simplest and best way to pay off your student loans is to just pay more. But sometimes that’s easier said than done.
You don’t necessarily have to pay double or triple; maybe you can just afford to pay $20 or $50 more every month.
Whatever is possible — do it! Any amount that you can pay over the minimum will help you erase your student loan debt sooner.
Just make sure your loan servicer is applying your extra payments to your loan principal. And over time, as your situation allows, increase the extra amount you’re paying.
Use a student loan payoff calculator to see how increasing your monthly payments can impact the total cost of your loan (and how much interest you’ll save!).
Estimate how long it’ll take to pay off your student loan debt using the calculator below. You can also use the slider to see how increasing your payments can change the payoff date.
Total Payment $
Total Interest $
Monthly Payment $
If you increase your payments by $ monthly on your $ loan at %, you will pay $ a month and pay off your loan by Jan 2021.
Does refinancing make sense for you?
Compare offers from top refinancing lenders to determine your actual savings.
Check Personalized Rates
Checking rates won’t affect your credit score.
Find Out: Which Student Loans to Pay Off First[ Jump to top ]
2. Avoid certain repayment plans
Government repayment programs such as income-based repayment can be a saving grace for those struggling to repay their loans, as they can help you avoid default on federal loans. But if you’re trying to pay off your loans faster and have the budget to do so, repayment programs can actually work against you.
Most repayment programs lower your monthly payments by lengthening your loan term. So not only will it take you longer to get out from under your debt, you may end up paying more interest overall, particularly if you don’t qualify for loan forgiveness. So, if you’re truly trying to pay off your student loans faster, avoid repayment programs that extend your payment terms.
Find Out: How Long to Pay Off Student Loans[ Jump to top ]
3. Use your job to your advantage
Effectiveness: Medium to high
Speaking of jobs, there are a few ways that your day job might help you pay off your loans, too. A number of jobs offer student loan forgiveness in exchange for working in a service capacity.
Some public servants, doctors, lawyers, nurses, volunteer organization workers, federal agency employees, and automotive workers may be eligible for student loan assistance or forgiveness, so check whether your career goals align with the criteria for each forgiveness program.
Some employers have started to offer student loan assistance as part of their benefits package, so it could be worth taking this into account as you look for your next job or asking your current employer if they offer (or would consider offering) this perk. Even if it’s not explicitly stated, it could be worth negotiating something into your compensation package if you expect student loans to be a significant burden on your finances.
Learn More: Should You Pay Off Student Loans or Invest?[ Jump to top ]
4. Consider refinancing your student loans
Student loan refinancing is an increasingly popular option for borrowers with good or excellent credit and relatively high interest rates.
When you refinance, you essentially consolidate your student loans into one by taking out a new loan with a private lender and use it to pay off your original loan. This allows many borrowers to secure lower interest rates because they’re more financially stable than when they took out the loan in the first place.
Keep in mind that if you refinance your federal loans, you’ll no longer have access to federal programs income-driven repayment or student loan forgiveness. But if you think refinancing could be a good fit for you, use this student loan refinancing calculator to estimate how much you could save.
Here are some lenders that will allow you to refinance your loans over the course of just five years (which will help you pay them off faster and save money in interest):
Keep Reading: Best Student Loan Consolidation and Refinancing Companies[ Jump to top ]
5. Take advantage of tax deductions and credits
There are two types of school-related tax deductions that can help reduce the tax burden for students and recent graduates.
Student loan interest tax deduction
The student loan interest tax deduction allows you to reduce your taxable income by up to $2,500 for interest paid on student loans in the year for which you’re filing. In order to qualify for this deduction, you must:
- Have paid interest on a loan in your name
- Have been enrolled at least half-time in a degree program when you took out the loan
- Be filing as a single taxpayer or as “married filing jointly”
- Have a modified adjusted gross income (MAGI) of less than $80,000 as a single taxpayer or $160,000 if you’re filing jointly
- Not have anybody else claiming you as a dependent on their tax return
Tuition and fees tax deduction
The second type of deduction is for up to $4,000 per year for tuition and fees. Un the student loan interest tax deduction, this can only be claimed for tax years in which you paid for educational expenses. This will generally only be an option while you’re in school, or if you go back to school while repaying your student loans.
To be eligible for this deduction you must have paid qualified education expenses of higher education (including tuition and fees, but not room, board, transportation, etc.) for yourself or an eligible student (your spouse or your dependent for whom you claim an exemption on your tax return).
If you’re still in school or have gone back to graduate school, you might also be eligible for tax credits, which directly reduce the amount of tax you owe.[ Jump to top ]
6. Enroll in autopay
Many loan servicers offer an interest rate discount of 0.25% when you enroll in automatic payments. This is a small amount, but can add up to some major savings over the life of your loan.
Plus, autopay is generally a good idea, as it decreases the chance that you’ll get into trouble by forgetting a payment. Talk to your servicer about any interest rate discounts they offer that you can benefit from.
Learn More: How to Lower Your Student Loan Interest Rate[ Jump to top ]
7. Start a side hustle
Effectiveness: Medium to high
One way to pay down your student loans faster is to make more money. But you can’t always get a raise or a better job on the spot. So start by increasing your income with a side hustle.
Getting a side gig doesn’t always mean driving for Uber or Lyft (but you can!); sometimes it just means doing something simple selling your unwanted stuff on eBay or Craigslist, delivering with Postmates or Grubhub, or starting a dog walking business. You can even rent out a room or your entire residence on Airbnb just once or twice a year and put that money toward student loan payments.
Find Out: How to Pay off Student Loans in 5 Years[ Jump to top ]
8. Cut from your budget
Effectiveness: Medium to high
The last thing you can do to really get your foot in the door when it comes to paying off your debt is to reduce your monthly spending wherever possible.
Whether it’s $50 less per month because you canceled cable or $200 of spare cash per month you didn’t spend going out to eat, look for extra wiggle room in your budget — and put that toward your student loans.[ Jump to top ]
9. Make extra payments whenever you can
In addition to paying more on your monthly bill, think about making extra payments. This can be particularly easy if you find yourself with extra cash.
- Grandma sent you a check for your birthday? Put it toward your loans.
- Got a one-time bonus at work for a job well done? Put it toward your loans.
- Tax refund? Put it toward your loans.
Spending that money on your loans now will pay off down the road when you’ve paid less in interest — and therefore have more money to spend how you wish.
Learn More: How to Pay off Student Loans in 10 Years or Less
10. Make bi-weekly payments
Another smart way to make extra payments and eliminate your debt is to pay your bill bi-monthly. Instead of making one payment every month, simply cut your bill in half and pay that amount every two weeks.
Even though this sounds it won’t do much, this strategy adds one extra payment to your loans each year. That can make a significant difference — especially if you’re paying off a large balance.[ Jump to top ]
11. Pay off capitalized interest
Capitalized interest is interest that isn’t paid off. That interest adds to your balance which causes you to pay more on your student loans overall.
Typically, interest accrues while you’re still in school or in deferment or forbearance. But if you make payments every month while the interest accrues, your student loan balance will be less and therefore easier to pay off since you’ll avoid capitalization.
Alternatively, if you’re still in your grace period, focusing on paying off the accrued interest can help lower your balance immensely.[ Jump to top ]
Stick with it and you’ll finally pay your student loans off
It’s easy to talk about ways to pay off your student loans faster, but actually doing it is the hard part. Once you decide which loan payoff strategies make sense for your financial situation, put a plan in place that includes regular check-ins to keep you on track.
While you’ll ly need to make some short-term sacrifices in order to pay off your student debt faster, you’ll reap the benefits once you’re loan-free, and be happy you put some extra effort (and funds) toward paying your loans off early.
If you stay motivated to follow all of these methods, you’ll be free from debt faster than you can imagine.
Learn More: How Often Can I Refinance My Student Loans?[ Jump to top ]
Napala Pratini contributed to the reporting for this article.
Home » All » Student Loan Refinancing » 11 Strategies for Paying Off Your Student Loans Faster
5 Steps for Student Loan Success
According to the Federal Reserve, as of 2017, the median sudent loan debt is $17,000 per student, it’s arguably more important than ever that students know what they are getting into, and that those with student loans know the who, when, how, and how often when it comes to paying their loan providers. This all begins with a good, solid starter foundation.
1. Find as much “free” money as you can
Check into scholarships, grants, academic achievement awards, etc. before looking into loans. There are scholarships for anything and everything these days, academic excellence, certain extra-curriculars, being left handed, making prom outfits duct tape, even being over or under a certain height.
Make sure you check through the school of your choice, and keep checking back each year.
I was able to scrounge up an additional several thousand dollars of last minute scholarship funding through my GPA at school! There are also specific scholarships depending on which year of school you are in, freshman, sophomore, junior, or senior, so make sure you keep checking to see if anything new is available to you!
See how much funding you can get without borrowing, and then calculate your costs. The more scholarships you can get, the less you will have to borrow and, eventually, pay back. Once you know how much you will still need to get yourself to school, look into student loans.
2. Look into federal loans
File your FAFSA, and do your research on different loan providers. Different providers will offer different repayment plans, interest rates,and term lengths.
Once you’ve made your decision, have someone else double check the terms for you, preferably a parent, guardian, or teacher that you trust to make decisions in your best interest.
If you have questions about any of the terminology or financial lingo, ask.
Make sure you know what you are signing up for before signing the papers. On that note, make sure you read your paperwork carefully.
Some of your loans might have longer grace periods than others, some might not have them at all, which means that you might start paying one loan straight school but have a six month window on another.
Know exactly how much you are borrowing, and from whom. Keep copies of everything somewhere easily accessible.
Federal loans are usually the most easily accessible option, and it’s relatively simple to renew your funding each year. Just make sure you file your FAFSA on time and know how much you are borrowing.
Some loan providers may also want you to have a cosigner. This is a huge step in taking out loans. While you may not have enough credit, or good enough credit, yet to borrow loans, your parents, relatives and friends might. In that case, you could ask them to cosign the loan with you.
Be careful with this, and make sure everyone understands what it means: if you fail to make payments, your cosigner will become responsible to pay your debts. As long as everyone knows what it entails, this can be a great option to open up more possibilities for funding!
Most of the time federal loans won’t cover your entire tuition so you may also have to look at Private Student Loans to cover the gap. These loans are offered by many traditional banks as well as some new lending companies. Do you research and make sure you find one that meets the criteria you are looking for. You can search private student loan options using our LoanFinder.
3. Make sure you know what’s happening with your loans at all times
Know which loan provider you have, and know if it changes. My loans were through the federal government via FAFSA, but they were sold off to Sallie Mae once I left school. Part way through my repayment, Sallie Mae transitioned them over to Navient, a subsidiary company of theirs.
With each change, the repayment address changed and the website that kept me up to date on all of my student loan information changed. Make sure you keep up on changes this so you always know what’s going on with your loan provider.
Know where they are, both the commercial and billing addresses, because many providers have both, one address to send paperwork to and another for sending in payments. Know how to contact them, phone numbers and emails, just in case.
Know who owns them, if anyone, and what the terms of your loan will be from the beginning. Know what they can and cannot do with your loans, what you can and cannot do with your repayment, research types of college loans and figure out what your best game plan will be for paying them off. You may even consider refinancing your student loans.
4. Make your student loan payments on time
Defaulting is not something to be messed with and can sometimes have serious consequences, including hurting your credit score, a garnishing of wages, or the loss of a tax return to cover missed payments.
Some loan providers offer automatic deduction payments, which means once a month they will deduct the amount of your student loan payment from your bank account in exchange for a lower interest rate.
This means you never miss a payment, and it actually saves you money in the long run.
5. Pay more than your minimums
Make smart money decisions. Any extra money you get, put towards your student loans. You’d be amazed how much an extra $10 a month will get you on your student loans. It may not sound much, but it adds up quickly.
$10 a month becomes $120 a year, and at 3% to 7% interest rates, it’s nothing to scoff at.
It will help keep your monthly payments from going directly towards paying off the interest, too, and bring your principle balance down faster.
Just these few steps will help you get a good basis of knowledge for paying down your loans efficiently and effectively. Keep yourself informed, and make sure you know your stuff!