What if you were told that there are five ways that you can pay off your student loans early? Education is required to get anywhere in today’s world, but repaying all those loans can be difficult after graduation. Thankfully, there are some ways that you can pay the loans down quicker, and you can have the extra money you need to buy a home, a new car, or take the trip of a lifetime.
1. Treat The Loans Like A Mortgage
If you have the extra money, treat your student loans like a mortgage. For instance, if you borrowed $25,000 with a 6.8 percent interest rate, the payment for a 10-year loan would be around $288 a month. So, instead of paying what is asked, why not pay $700 a month instead? The difference would be that the loan would be paid off in three years as opposed to 10. You will pay down the principal quicker and lower your interest charges. The cost of the loan would be $28,000 instead of paying $34,560. If paying $700 a month is too much, try splitting the payment into halves. Pay $350 every two weeks. It all works out the same in the end.
2. Establish A College Repayment Fund
One of the easiest of the five ways to pay off your student loans quicker is to set up a repayment fund. After graduation, you can put back an extra $100-$200 a month. You can have the money deposited into an automatic savings account. This can help you to speed up your repayments. By having forced savings, it allows you to set aside money that you would normally spend on other things. Never put it into a frequently used checking or savings. If you have easy access to that money, then you might be tempted to spend it. Tie an account to mutual funds, stocks or annuities. Let the money grow into a lump sum, and you can transfer it to pay a large portion of your loans.
3. Get A Job In College
While it would be nice to devote all your time to studies, you can save yourself a great deal of money by working a part-time job in college. You can pay on your loans or pay cash on your classes. By taking out less of a loan, you will have less to pay back after graduation. Though it is not possible for all degrees, many find that they can do small things to have a huge impact on their student loans.
4. Live Frugally
Living within your means is a great way to save for a rainy day. However, did you know that if you put back some money into a change jar or emergency fund you can save a ton of money? For instance, if you are buying gourmet coffees in the morning before work, you can save the $5.00 a day and put it on your bills. That $5.00 large cup of coffee can put $1,300 a year on your student loans. While that doesn’t sound like a lot, that is just from coffee. What if you packed your lunch instead of eating out? That could put an additional $2,600 a year if you spend $10 a day.
5. Get Help From An Employer
One of the most creative of the five ways to pay off your debts early is to have employer assistance. There are many companies that help their employees to pay off debt. For instance, some states are forgiving teacher loans if they major in special education. Choose wisely your major and the company that you choose to work with. It could be a handsome salary and an easy way to pay off student loans early.
No one wants to have a looming cloud of debt hanging over them for life. Thankfully, these five ways that you can pay off your student loans early can help you become debt free quicker.