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Student loan debt is at an astronomical high in the United States, hitting 1.56 trillion dollars in 2019. The average monthly payment for loans not in deferment is $393. This situation has reached a crisis level for the nation and for individual borrowers. Fortunately, you don’t have to accept that you will personally be in debt to the government for decades. You can speed up the repayment process.
Student loans do not have any prepayment penalties, so you can quickly reduce your balance by making extra loan payments each year. Even one extra payment helps, but you will really see a difference if you make an extra payment once every quarter.
If you can manage, pay at least a little more than the minimum each month. Even $20 extra will help you chip away at the balance and get you out of debt more quickly. However, do call and make certain that your loan company is applying the extra to the principal.
If you have good credit but high interest rates on your loans, you, a refinance may be your best way to speed up your repayment. You should research your options with multiple private lenders. See our list of the best online loan companies right here. You may be able to secure a lower interest rate and pay less each month. Remember that refinancing will eliminate some federal loan options such as loan forgiveness and income-driven payment plans. The best student loan refinancing companies will inform you of the terms of your specific loan agreement.
Some lenders offer interest rate deductions if you opt for automatic payments. You can possibly drop your rate by .25 or more. In addition, automatic payments ensure that you don’t make a late payment or miss one altogether. The savings on interest and potential late fees is definitely worth a second look.
If you get a yearly tax refund or salary bonus, consider using it to pay down your student loans. Paying off a few thousand dollars each year in addition to your regular payments will really speed up the repayment process. Plus, using your bonuses or refunds means you won’t cut into your usual monthly operating funds.
Student loan debt can really hurt you financially. You can get rid of it more quickly if you choose one or two of the above methods. Making a little more effort each month or year really pays off.