If your student loans are weighing on you, it’s understandable if you want to get out from under them as soon as possible. Luckily, there are a number of strategies you might use, from making extra payments to looking for “free” money and exploring repayment plans and refinancing.
Here are nine ideas to consider on your path tow🔴ard paying off student loans.
2. Consider bi-weekly payments
5. Find forgiveness opportunities
1. Make extra payments
If you can afford it, making extra payments is a simple way to pay off your loans faster. Even a little extra cash each month can translate to interest s🌠avings.
Before you start making additional payments, however, talk to your loan provider about how that money is applied to your loans — you’ll want to ensure it goes directly toward your loan’s principal balance.
“Have a discussion with your loan servicer and ask them to give you a little bit of detailed info about how interest is calculated and what happens when you make extra payments — and how much of those payments would be applied to the principal balance,” said Bruce McClary, senior vice president at the National Foundation for Credit Counseling.
If you have multiple loans and aren’t sure which to prioritize, one approach to coᩚᩚᩚᩚᩚᩚᩚᩚᩚ𒀱ᩚᩚᩚnsider is the debt avalanche method. Here are the steps to follow this method:
- List your loans from highest to lowest interest rate.
- Put extra cash towards the debt with the highest interest rate first, while continuing to make minimum payments on your other loans.
- Keep at it until the highest-rate loan is paid off, then move to the next-highest rate and so on, until you’re debt free.
This method can minimize the amount you spend on inওterest over time.
2. Consider bi-weekly payments
Also, consider the benefits of making half-payments every two weeks, rather than making one full payment monthly. You’ll still pay the same amount most months, since your payments are simply split in half — you’ll just make them more frequently.
The bonus here is that you’ll squeeze in one extra student loan payment per year. On a typical monthly schedule, you’d make 12 full payments each year. But if you switch to the bi-weekly strategy, you’ll end up with 26 half-payments — which translates to 13 full payments annually.
This method 🅺can help reduce accrued interest. Plus, bi-weekly payments may line up nicely with your pay schedule, which could make it easy to divert a portion of each paycheck toward your debt.
To set up this payment schedule, you’ll likely need to sign into your student loan account, enroll in autopay, and then adjust the frequency and amount of payments. (Autopay should also deliver a discount on your interest rate, usually to the tune of 0.25 percentage points.)
3. Use windfalls
A relatively painless way to make a♓ dent in your student loans is by putting 𓆏any unexpected cash toward your debt. These windfalls can include:
- Tax refunds
- Work bonuses
- Inheritances
- Profits from selling an asset
- Casino winnings
- Settlements from an insurance claim or a lawsuit
While it might be tempting to splurge on a luxury purchase or weekend trip, putting extra money toward your student loans can make your debt disappear that much faster. For example, if you put a $1,000 tax refund toward a $10,000 student loan balance (with 8.00% ꧟interest and a 10-year term), you’d trim 17 months off your loan term and $1,057 off your interest costs.
Before moving forward, however, assess what makes sense for your financial situation. If you have a competing financial priority, such as high-interest credit card debt, you might consider paying that down before putting the res♒t toward studenℱt loans.
You might also weigh the size of your wind👍fall in comparison to your student loan deb🥃t.
“If the windfall isn’t significant enough to change your repayment trajectory, using it to bring your balance down might not make much sense,” said Stanley Tate, a student loan lawyer. “But if the windfall is sizable and you can aggressively tackle the debt without depleting your bank account, it’s worth considering.”
4. Look for free money
While “free money” might sound too good to be true, there are programs that can help repay your loans. For example, your employer may help pay off student loans as an employee benefit. There a♌re also debt repayment and forgiveness opportunities in certain careers, such as healthcare, law, and education.
Sev🦂eral states also offer finan💞cial incentives for moving to certain geographical areas, including assistance in paying off student loans. For instance, offers up to $15,000 in loan assistance if you become a full-time resident in a designated county within the state.
5. Find forgiveness opportunities
There are several forgiveness programs for federal student loan borrowers. While the eligibility requirements can be quite narrow, they can save you serious money while♔ paying off stud♛ent loans.
Public Service Loan Forgiveness (PSLF), for example, will erase any remaining debt for those who work for a nonprofit orꦬ government employer and make 120 qualifying payments. Similarly, Teacher Loan Forgiveness offers up to $17,500 in debt cancellation if you teach for five years at a low-income school.
To find opportunities you might qualify for, reach out to your professional organization or network, aꦆnd look into resources offe🦄red by your state or local community. You can also talk to your federal loan servicer about government-exclusive forgiveness programs.
6. Review repayment plans
If you can’t comfortably afford your loan payments, adjusting your repayment plan could help. Federal borrowers, in particular, have various options, such as income-driven repayment plans, which set payments based on your income and family size. Or Graduated Repayment, wh🔜ich sets your payments lower at first and slowly increases them over time.
Consider using Federal Student Aid’s to determine your eligibility for — and estimate costs under — each available repayment plan. If you have private student loans, you may also be able to access special repayment plans. Contact your lender to learn about your options.
7. Enroll in autopay
Enrolling in autopay is a simple way to expedite your student loan payoff process. With this 🍨option, your lender will automatically withdraw your monthly payment from an attached bank account.
Not only will this help you avoid missed payments (and thus potential late fees), but most lenders also offer an interest rate discount of 0.25 percentage points for setting up autopay. Thaﷺ🐠t may not sound like much, but it can add up over several years.
For example, if you owed $20,000 at a 7.00% interest rate and a♔ 10-year term, enrolling in autopay for a 6.75% rate could save you more th🧸an $300.
8. Look for other discounts
Beyond autopay discounts, see if there are other opportunities to shave a percentage off your interest rate. These types of discounts are mostly found with private lenders and can include loyalty perks (receive interest savings if you’re an existing customer) or referral bonuses (earn money by referring friends to your lender).
Some lenders might even offer cash rewards when you graduate, which can help to lower the amount you ultimately owe in stud♈ent loan debt.
9. Research refinancing when paying off student loans
When you refinance your student loans, you combine your existing debts into one new loan using a private lender. Qualifying will depend on your credit and income, but potential benefits include securing better loan terms, having a single monthly payment,🉐 and switching to a better lender.
“Refinancing can be a powerful tool for tackling high-interest private student loans,” said student loan lawyer Tate. “By refinancing, you can potentially secure a lower interest rate, thereby reducing the total amount of interest paid over the life of the loan and enabling you to pay off the debt more quickly.”
However, proceed with caution if you have federal student loans. Refinancing federal debt with a private lender will cause you to permanently lose federal benefits, includi﷽ng income-dℱriven repayment plans, forgiveness opportunities, and other protections.