Feeling crushed by overwhelming debt? We got you covered.
You’re struggling to pay off your massive student loan debt, with no light at the end of the tunnel? Sound familiar? Here are 7 strategies you can take advantage of to help pay off your student loan debt.
Make More Than The Minimum Payment
It goes without saying that when you make more than the minimum payment each month that you can pay off your debt faster. Do confirm that the extra money is applied to your principal balance than to next month’s payment.
You can also free up your budget by ending subscriptions or getting a cheaper cellphone plan. It’s all in the planning, so look for ways to better budget your finances.
Enroll in an Income Driven Repayment Plan
There are many income driven repayment (IDR) plans available to student loan borrowers who are overwhelmed and unable to make standard monthly payments. Most require borrowers to pay a fixed monthly amount for up to 10 years. This might not be the fastest way to pay off your loans, as you end up having a longer loan term in exchange for lower monthly payments.
Consider Public Service Loan Forgiveness
If you have federal student loans, you may be eligible to apply for the Public Service Loan Forgiveness Program. By working for an eligible employer, and making 120 on-time payments the program forgives the remainder of your student loans.
Refinance Your Student Loans
If you own private student loans, it pays to take note of private student loan interest rates. You can always switch from federal to private student loans if you can get a more affordable interest rate.
Refinancing your loans to get a lower interest rate will slow the growth of your balance. You will be able to contribute more of your monthly payments towards your principal instead of interest, letting you pay off your loan faster.
Make Lump Sum Payments When Possible
After receiving your tax refund, most people go on a spending spree. Instead of splurging it, it will be more practical to put that towards your student loans and save yourself some interest.
For example, on a $10,000 loan with a 5% interest rate. If you made a lump sum payment of $500, you would shave off $313 in interests and pay off that loan 8 months earlier.
Capitalize on Interest Rate Deductions
In certain cases when you sign up for automatic payments, servicers do offer borrowers to lower their interest rate by 0.25%. This can help borrowers twofold, as they pay less in interest over the loan period and never miss a payment. On top of this borrowers can still pay lump sum payments to pay off their loans faster.
Take note borrowers, you don’t have to utilize every strategy that we’ve listed, but you can use whichever best suits your needs. And if you ever need help with budgeting or planning your monthly payments, give the Financial Helpers a call. We’re always ready to help.