Paying off your student loans may seem overwhelming, but it doesn’t have to be. Whether you’ll be graduating from the university soon or you’ve been trying to kick out those loans, you can make a plan for paying off your student loans quickly.
While there is no way to avoid paying your student loans, there are different steps you can take to pay off your student loans on time. Here are smart tips to help you pay off your student loans faster.
Pay More Than The Minimum Monthly Amount
Most loan provider allows you to pay more than the minimum monthly amount. Doing so will let you pay back your loan faster, and you can save on interest throughout the loan. Any amount that you pay over the minimum will erase part of your student loan debt sooner. But you need to make sure your loan provider is applying that additional repayment to your loan principal.
Take Advantage Of Tax Deductions
The law enables you to deduct up to $2,500 to pay off your student loan interest depending on your income. You can claim this tax deduction to pay off your student loan if your filing status is not married. You don’t have to itemize to claim this deduction. You will save a few hundred dollars on your income taxes if you qualify for the deduction, which could help you with student loan repayment.
Refinancing Your Student Loans
Refinancing your student loan is one of the best options if you have a good credit score. When you refinance, you’re consolidating your student loans into one by getting a new loan and use the money you receive to pay off your original loan. With student loan refinancing, you can secure lower interest rates because you’re more financially stable.
Set Up Automatic Payments
Most lenders set up the loan to be deducted from the borrower’s bank account automatically. If your student loan servicer does not set automatic payments, you need to contact them to do so. This way, you won’t miss any payment because you can’t access the Internet or you forgot to send payment to your lender. Remember that any missed payment can impact your credit score, and bad credit could prevent you from opportunities in the future.
Pay Off Capitalized Interest
Capitalized interest adds to your loan amount and causes you to pay more on your student loans. Capital interest accumulates while you’re still in school, but your student loan balance will be less if you make payments every month. Alternatively, you can focus on paying off the accumulated interest to lower your total balance if you’re still in your grace period.
Use A Cash Windfall
When you get a chunk of money either from winning a lottery, a settlement from a lawsuit, an inheritance, or an insurance claim, you can use this money to pay off your student loans. Apart from getting a settlement or inheritance, many people also get a cash windfall from a tax refund. You can use part of the tax refund money to pay off your student loan if you don’t want to give everything.
While it’s easy to talk about different ways to pay off your student loans faster, doing it is the most challenging part. Once you decide which strategies make sense for you, put a plan in place.
While you’ll likely make some short-term sacrifices to pay off your loan faster, you’ll reap the benefits once you’re free. If you follow the tips listed above, you will be free from debt more quickly than you can imagine.