The day has finally come, you’ve graduated college, and now it’s time to face reality, how to repay a student loan. More than 44 million Americans together own $1.5 trillion, which is a tremendous amount of money.
There is a great chance you also fall into this group as well.
However, wouldn’t be nice to get rid of debt and spend money on things you actually care about. The good news is that you can employ a couple of strategies which can help you pay off your student loan faster.
Increase your payments
One of the fastest ways to pay down your student loan it to increase monthly payments. However, “paying more” is not an appropriate solution for the majority of graduates. But, if you could make a couple of extra payments during the year, it will have a significant impact on your balance.
For instance, you could use part of your yearly bonus, or a tax refund for this purpose, instead of making payments out of your salary. In this case, you will be able to save more money on interest and eliminate debt sooner.
Another trick you can use is to divide monthly payments in two. For example, if you have $400 due at the end of every month, pay $200 on the 15th, and a second part on the 30th. This will not only make your payments easier to manage, but you won’t be late.
Since the majority of people get their salaries every two weeks, you’ll always follow the monthly payment plan.
On top of that, if you decide to take this approach, then each year you will have one extra payment on your student loan balance. If you are tied to a 10-year repayment schedule, this simple trick can help you knock off an entire year, with interest included.
Think about refinancing your loan
If you have a good job and steady income, then refinancing your loan might be a suitable solution. In this case, you are taking a new loan, and using the fund to pay off the old one. Usually, people refinance their loan because they want to get better conditions and low-interest rates.
For example, you may switch from a 10-year loan to a 7-year loan. This will increase your monthly payments, but you’ll be able to pay off the loan faster and save some money.