Student loans are causing a lot of trouble for many Americans. Carrying this kind of debt may cause individuals to postpone or forego buying a home, purchasing a car and starting a business. It can even prevent people from starting a family. Research published in the Journal of Family and Economic Issues supports the notion that debt is becoming a roadblock to marriage.
If the burden of college debt is preventing you from pursuing or achieving your goals in life, you’ll want to take measures to pay this off faster. Making your minimum monthly student loan payments, however, isn’t enough. Here are strategies you should implement to help you reach your payoff goals quicker:
Make Additional Payments Wisely
Federal and private student loan lenders won’t penalize you for paying more than the minimum amount (and paying off your debt early). You have the option to make a large payment on the due date or do extra payments several times in the month.
This repayment strategy, however, does have a catch. Student loan servicers, the people who collect your payment, may apply the additional amount to the succeeding month. Although this advances your due date, it doesn’t help you pay off your college debt quickly. Remember to inform the servicer to apply the extra payments to your current loan balance.
Enroll in Automatic Debit
Signing up for automatic pay helps reduce the interest rate of your college debt. Federal loan servicers provide a 0.25 percent discount if you allow them to automatically deduct payments from your designated savings account. Some private lenders offer an automatic debt service, as well.
Although the savings from this interest reduction is likely minimal, this is still extra money that can help you pay off your loan quickly. Get in touch with your servicer to find out if autopay is available.
Convert Windfalls into Additional Payments
If you’ve received a financial windfall, such as a tax refund, annual bonus or a cash incentive, you could allocate a portion of that amount to your student loan debt. Putting a part of your cash bonus toward your college loan might feel painful, but you can change that mindset by looking forward to the day that you’re free from debt.
Refinance Your Student Loan
You might qualify for college debt refinancing if you have good credit standing and a steady source of income. This strategy entails taking out a new loan and using the money to pay off the old one. People typically refinance to enjoy a lower interest rate, adjust the payment period or both.
An example is to refinance a 10-year college loan to a term of six years. Although this will lead to higher minimum monthly payments, you’ll enjoy savings on interest charges and pay off your student debt faster. Also, if you take steps to refinance the interest rate of your student loan, you’ll pay down the balance as quickly as possible.
When looking for a reliable lender, work with someone who does not impose loan origination charges, as these can cancel out your interest savings. What’s more, assess the risks of refinancing a federal student loan. Doing this will convert the federal loan into a private loan. Once this happens, you forfeit federal protections, such as student loan forgiveness and income-driven repayment options.
Augment Your Income with a Side Hustle
If you’re not earning enough to pay off your college debt, consider picking up part-time jobs during weekends or weeknights to boost your income. Then, use that earned money to drive down your student loan balance.
Plenty of side gigs are available for you to try. Some of them are the following:
- Drive for Lyft or Uber – You can use your car to make money. Earn dollars simply by picking up and dropping passengers at their intended destination. The best part of this is you could switch on or off your availability through these networks with a touch of a button. This enables you to make money whenever you want.
- Manage Social Media Profiles for Companies – Many small business owners don’t have the time to engage customers and post updates on various social networking platforms, such as Facebook, Twitter and Instagram. Take the initiative to get in touch with these business owners and offer your social media management services for a fixed monthly fee.
- Walk Dogs – If you love these furry animals and reside in a pooch-filled community, identify yourself as a reliable dog walker and name your price.
- Do Some Housekeeping – Many homeowners and private families have no time to clean an entire house by themselves. If you love cleaning, list your services on a housekeeping website and promote yourself.
- Teach a Language – If you’re fluent in a second language, such as Spanish, French and German, you could teach this to others for a fee.
Paying off your college debt quickly is possible when you keep these suggestions in mind. Don’t let student loans hold you back in life. Take steps to pay them off as fast as you can.