5 Best Ways to Pay off Your Student loan
Extra payments can help you to pay off your loans fast. The best way to pay off your debt is to pay more than the minimum amount every month. The more you pay down the principal balance – the less interest you’ll owe towards your loan. You can use an online student loan payoff calculator to get rid of loans faster and to see how much you’d save interest. Here are some strategies to reach your student loan to pay off goals.
1. Make extra payments the right way
The simple and most effective way to pay off your student loan is just to pay more than your minimum. You can make an additional payment or make one large payment on the due date.
It’s not compulsory to pay double or triple of your payments, but just an affordable amount that can be $20 to $50 more every month. This minimum payment will help you to erase your loan debt sooner. Make sure the servicer, who collects your bill, is applying your extra payments to your principal loan amount. In case, if the servicer adds the extra amount to next month’s payment, that advances your due date. This won’t help you to pay off the loan fast.
So instruct your servicer to apply the extra payments to your current balance to keep the next month’s due date as planned.
2. Consider refinancing your student loan if you have good credits
Refinancing your student loan helps you to pay off the debts faster, without any extra payments. If you have a good credit score with a steady job, then you’re a suitable candidate for refinancing.
Refinancing refers to taking out a new loan with a private lender at low-interest rates and using it to pay your original loan faster. It may increase your monthly payments but it will help you to save money on interest rates and pay your debts faster.
For example, if you refinance $50,000 from 8.5% interest to 4.5%, it will help you to pay off your student loan debts nearly two years faster than previous and lowers your interest amount too.
3. Biweekly payments
This simple strategy will help you to make extra payments on your debts. Pay half of your payments every two weeks instead of the month-end payment schedule, which will help you make an extra payment each year. You can use a biweekly student loan payment calculator to see how much money and time you can save by this.
4. Use your job to advantage
Several jobs offer student loan forgiveness in exchange for working for them. For example, public servants, doctors, lawyers, federal agency employees are eligible for student loan forgiveness or assistance.
5. Enroll in autopay
Signing up for autopay is a potential way to lower your student loan interest rate. Federal student loan servicers offer an interest rate discount when you enroll in automatic payments. It is generally a good idea, in case you have trouble forgetting payments.
Bottom line
Stick with one of these strategies and you will finally pay off your student loan faster. Decide which pay off strategy can meet your financial situation then put the plan in place to keep you on track.
