After graduating from college, you may be daunted by the fact that it is now time to pay off your student debt. Typically, you have a few months before repayments kick in, but they are coming.
It’s especially scary or stressful as you are just joining the working world. However, there is a bright light at the end of the tunnel!
The process of paying back your student loans can be simplified and sped up if done correctly. However, every person has a unique situation and amount of student loans to repay. So it’s important that you don’t compare yourself to others with loans and create your own repayment plan.
Here are some simple tips for paying back your student loans efficiently and quickly that you may want to explore.
1. Create a Budget
Calculate your income to debt ratio to ensure you are not dishing out more money than you are currently making. If you realize this is the case, find areas that you can scale back on and live under your means for a while.
Placing bill payment reminders in your phone with alerts attached to them will also help keep you on track. Utilize the technology at your fingertips to keep you on your toes and stay organized while managing and maintaining your budget.
2. Prioritize Debt Payments
Since your loans with higher interest rates will likely be your credit cards, pay those off first. Paying off these high-interest loans will save you from paying more in interest over the long run.
Once your highest-interest card is paid off, make that same payment to the card with the next-highest interest rate. Continue the process until all the credit card debt is paid off. And in the meantime, limit your credit card usage. This will help improve your credit score and keep your debt from increasing.
3. Set Up a Payment Plan Right Away
It is vital to stay on top of your incoming mail and emails that are associated with your student loan payment(s). Consider tracking the end date for your loan repayment term so that you can avoid late fees and default status. This can ultimately result in a low credit score is you’re not on top of it. Paying student loans is critical to obtaining a positive credit score.
4. Refinance or Consolidate
As you begin to make regular loan payments, you may realize that your amount or interest rate is preventing you from paying off your loan as quickly as you would like. It is critical to research other lenders to refinance your loan through so that your payments can be more comfortable for you to make. Pay attention to loan repayment length, interest rate, and monthly payment before making your final decision.
Consolidation allows you to group all of your loans into one new loan so that you are making multiple payments to separate lenders. Loan consolidation can potentially lower a single monthly payment at a lower interest rate.
5. Increase Your Payment Contributions
As with some of the other above options, if you are able to, starting increasing your payments. Maybe that’s adding another $50 each month towards your repayments. This of course is not feasible for everyone, especially if you already have quite the high monthly payment that already eats at your wallets.
However, if you have the option or make extra money, take the opportunity to fast track paying back your student loans. A great place to start is even doing this every so often, not even monthly.
6. Be Patient
Maybe sort of counter intuitive to the title including “quicker” but paying off student loans no matter what, can take time. If you are not making well-above six-figures or getting financial help from family, it still takes some time even with the above tips.
At first, it may seem like you aren’t making significant progress but keep at it! There are tons of student debt stories online of people who accomplished some amazing pay off stories.