You’re about half way through college and you’re watching your student loan debt numbers creep up. Maybe you’re already out of school and your interest rates make you feel a bit queasy. Even though it won’t feel like it as you’re doing it, paying off your student loans faster will save you money in the end. Here’s what you need to do.
Tired of watching your student loan balance getting bigger? The sooner you pay those loans off, the sooner you can focus on other aspects of your life. Paying before graduation, funneling windfalls to your loans, and looking for other forms of assistance all help. Keep reading to find out how.
Don’t Let Your Student Loans Control Your Life
Start Paying Right Away
You don’t have to wait until after graduation to start paying down your student loan debts just because you can. The sooner you start paying towards the loans, the faster they’ll be paid off. Working a part-time job while you are in school and dedicating the majority of that income to your loans could significantly decrease your balance by the time graduation rolls around. This is especially helpful if you have a subsidized loan, as they don’t accrue interest while you’re still in school or during your deferment period.
Ignore the Minimum
As in, always pay more than the minimum amount due each month. Federal law allows lenders to apply your payments to late charges first, interest second, and your principal last. The less you pay each month, the harder it is to dent your principal balance. Add a little extra each month to reduce the amount owed faster.
Apply Windfalls to Your Loan
Apply all “found money” directly to your student loan. It may hurt a bit at the time, but unexpected inheritances, gifts, or bonuses can make a huge dent in your loan amount over time. Keep a small percentage for yourself and apply the rest to your balance.
Employer Repayment Assistance
While some employers offer tuition reimbursement, others offer repayment assistance after graduation. This is a newer benefit, but it is growing in popularity as millennials with larger-than-ever loan balances are hitting the job market. The average monthly reimbursement ranges from $100 to $300 per month.
Planning to join the military after school? Ask your recruiter about student loan forgiveness programs. The number of years you have to wait for assistance varies by branch, but you may be able to apply your GI Bill benefits to your existing loan debt after completing the requirements for time served.
You can, of course, take on a side gig for extra income, go into public service, claim your interest on your taxes, and renegotiate or refinance for lower interest terms. No matter what you choose to do, make repaying your student loan debt high on your list of priorities. The sooner it’s off your plate, the more you’ll be able to focus on more exciting aspects of your post-college life.