Ten (10) Easy Steps to Pay Off Student Loans

Ten (10) Easy Steps to Pay Off Student Loans

Nobody enjoys having to repay a student debt. It could put a burden on your finances and keep you from making the most of your money. Nevertheless, it’s not always a good idea to pay more toward your student debt. In this article, we will review different repayment techniques to pay off student loans if you desire, and see the easy steps you can take to do so.

Ten (10) Easy Steps to Pay Off Student Loans

If you are looking for easy and some ways to clear off your student debt, follow the following steps below. 

Establish a Budget

This one will revolutionize the game, you guys. If you haven’t already, now is the time to create and adhere to a budget. You can see precisely where your money is going and where you may make savings by using a zero-based monthly budget.

It’s far better to keep to a budget than to hope to find $10 in your high school windbreaker jacket since you could even discover “extra” money you didn’t realize you had. You’ll quickly see results if you start allocating all that additional cash toward your student debt each month!

EveryDollar makes budgeting simple. Even better, allocate a budget line item for each student debt you are repaying. You’ll be able to track your progress as you continue to pay down your student loan debt, and it will be quite satisfying.

Make Some Compromises in Terms of Money

Consider your way of life. What extras have you been relying on that you don’t need? The cable bundle is gone. Bougie subscription boxes, see you later. By hiring a roommate, you might perhaps halve your living expenses. Do you have a guest room that’s not being used all that much these days? Hire it out or use it for Airbnb. Imagine how fast your debt would be paid off if your housing expenses were drastically reduced.

Consider putting some unwanted items up for sale. Examine your garage, storage space, and closets to see what you may sell on Craigslist, Facebook Marketplace, or eBay. Then, total the amount you spend each week on dining out. Instead of spending $7 on an oat milk latte, make your own at home. Instead of spending $10–20 on lunch, eat your leftovers (they aren’t that horrible), or a food plan for the week. Learn how to shop smartly. There are many original methods to save money, I assure you. But it all begins with a willingness to trade off short-term benefits for longer-term ones.

Wage Down Your College Debts with Every Pay Increase and Tax Return

What often happens when someone receives a raise? They treat it as if it were nothing. They then question why it seemed as if they had not received a raise.

Put your additional money toward paying off your college debts as you advance in your job and get promotions as you go. Do not relocate to a larger home. Buy a used automobile instead. Don’t purchase any fancy clothing. Also, hold off on smartphone upgrades. You were already making do without that additional cash, and you can do so for a little bit longer. The moment is not right to change your way of life. Later, when you won’t be receiving any payments at all, you may do that. Utilize your increase in income to make significant headway in your battle against student loan debt.

The tax refund is no different. How many individuals do you know who spend all of their “free money” on new furnishings, clothing, or a 55-inch flat-screen TV? Once you make one more deposit into your bank account, a little voice in your brain screams, “Treat yourself!”

Determine the Payment Date

You may input your monthly payment, loan amount, and interest rate for any student loan you have in our student loan payoff calculator. If you continue paying the minimum payments, you’ll be able to see when each debt will be paid off. At first, you may not like what you see but relax.

Give More Than the Required Minimum

This one has undoubtedly been spoken to you before. If you merely make a minimal amount each month, you won’t move forward very quickly. With the interest you’re accruing, you may not even be making a profit! You may reduce the amount you owe more quickly if you make higher payments. Use the student loan payoff calculator to experiment and see how much faster you can pay off your debt by making additional payments.

Here’s an illustration:

Let’s suppose you owe $38,792.1 in student loan debt, the amount the average student graduates with. (That sum may represent several loans, but for the sake of this example, let’s assume they are all one loan.)

You would be looking at a minimum monthly payment of $426.78 with a 10-year loan term and an interest rate of 5.8%, which is the industry average. Your total payments would be $51,489 due to interest, which is $12,697 more than your initial loan. Yikes. That’s awful.

But suppose you choose to make the minimum amount each month plus only 20% extra ($85.36). You would pay off your full debt in around eight years and save $2,794.04 in interest (plus more than two years of your life) if you did so. Your monthly payment would then be $512.14. That’s better, I think.

You might pay off your debt even quicker if you made monthly payments that were over 20% more than the minimum (I like that plan even better). You see what I mean! A word of caution, though: If you pay more than the required minimum each month, the student loan servicers may roll that additional sum over to the next month’s payment.

Although you will delay the due date, you won’t truly pay off the debt any sooner. Inform your loan servicer to simply apply the additional funds to your outstanding loan debt and to maintain the same due date for the next month.

You may be familiar with biweekly payments, which include making two installments each month. If you just have one debt to pay off and the double payments encourage you to work much harder to accomplish it, I’d only advise putting this up. Otherwise, I want you to use a strategy known as the “debt snowball approach” to pay off each loan one at a time, starting with the lowest.

All things considered, you could believe that paying more money is an impossible goal if you find it difficult to simply make a minimum payment each month.

Refinance your Student Loan Debt

Be aware that not everyone should refinance their student loans before you leap headlong into the clutches of an overly enthusiastic lender. If somebody told you that paying down student debts in this manner is the only viable option, they were lying. However, it doesn’t follow that you shouldn’t at least consider refinancing.

When you refinance, you transfer all of your loans—federal, private, and sometimes a combination of the two—to a lender who settles them on your behalf. And the money they just fronted you with is now what you owe this new lender.

With a refinance, the objective is to get a lower rate and better payment terms, which entails paying one lender less each month for a shorter time rather than paying one or more lenders more money for a longer time.

Better still, if you’re able to maintain your payment level from before the refinancing. As a result, you will be contributing more to the principal each month than you were before and avoiding paying additional interest. Additionally—and this is the greatest part—once you pay off your newly refinanced student loan, you may accelerate your debt snowball even further if you have more debt.

But keep in mind that you are refinancing to receive a better rate and conditions. Don’t refinance if that’s not what you’re being offered. It’s a lousy offer. Do your research and study the tiny print carefully to avoid getting yourself into a worse situation.

Use the Debt Snowball to Pay Off Your Student Loan Debt

Many individuals have successfully eliminated their debt using the debt snowball strategy, which also applies to student loans. List all of your loan obligations in order of least sum to greatest, including private loans, secured loans, unsecured loans, and anything else. Pay down the student loan with the lower amount first. Pay the minimum on all other debts while paying off your initial bill with whatever additional cash you have.

Move on to the debt with the next-smallest amount once you’ve paid off the previous one. Add the minimum of the second balance to whatever you were contributing to the previous one. When you’ve paid off that loan, go on to the next one and continue the procedure until you’ve paid off all of your debt. Boom.

Maybe you’re thinking, “Nope, this will take forever!” Do not misunderstand. The majority of individuals who fully commit to this approach pay off their debt in 18 to 24 months! That’s hardly really an eternity, is it? The ability to feel progress as each student loan is paid off is my favorite part of using the debt snowball strategy. Getting rid of those lesser debts initially can provide you with a few easy victories and keep you inspired to quickly pay off the larger student loans!

As you pay off each debt, just be careful not to keep the additional payment money for yourself. Roll that money into the subsequent loan payment to maintain the momentum.

Using a Side Business, Increase Your Income

Take up a part-time job on the weekends or evenings if money is your greatest concern so you can accumulate cash rapidly. Then pay off your student loan debt with the additional money! There are a ton of side business opportunities available, from Uber driving and food delivery to puppy walking and home watching. To pay off my college debts more quickly, I drove for Lyft and Uber and performed freelance marketing work.

And please don’t use the “I don’t have time for another work” defense against me. You have time to earn a little more dollars if you have time to spend with your friends, browse Instagram, or watch Netflix.

Don’t forget that the additional work won’t stay forever. You’re just trying to be committed and eliminate your student loan debt so you can go on with your life.

Don’t Rely on Debt Forgiveness for Student Loans

Knowing that you may have your student debts forgiven later, I know that many people undoubtedly assured you that taking out student loans was no big problem.

However, the cancellation of student loans is not the reality that it seems to be. First of all, there are several criteria you must fulfill to qualify for the present program (like working in a public service job for 10 years). And even then, pardoning someone isn’t a given.

Now, there have been a lot of discussions recently regarding the government canceling all outstanding student loan debt. That’s great, but don’t put too much stock in it. It is ideal for you to have a well-paying career that you like so that you can pay off your student debts as quickly as possible. By doing this, you might avoid wasting years of your life hoping to get your debts forgiven—which might never happen.

 

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How to Pay Off Student Loans: FAQs

Following are responses to some frequently asked queries regarding how to pay off student loans:

What is the normal repayment period for student loans?

The total amount of your debt, your interest rate, and the length of your payback period all affect how long it will take you to pay off your student loans. Repayment periods for federal student loans range from 10 to 25 years. Repayment durations for private student loans typically range from five to twenty years.

What method of student debt repayment is the quickest?

Paying more than the minimum amount due each month can help you pay off your student loans faster. Any additional funds you may put toward your loan debt will help you owe less and pay less interest overall. Ask your servicer to apply any additional payments you make to the loan principal when you make them.

When is the first of my student loans due?

When your grace period expires on the majority of federal student loans—typically six months after you graduate, withdraw, or drop below half-time enrollment—you are required to make your first payment. You may choose to make interest-only payments while you’re still in school to keep your interest charges as low as possible.

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