Tips for Paying Off Student Debt Sooner than Later

June 1, 2017

According to a report by the Department of Education, one in four student loan borrowers is at least a month behind on their federal student loan payment. While there’s no shame in falling into a slump (it happens!), the havoc that overdue loan payments can wreak on your credit and personal financial sanity can be catastrophic.

The bottom line is that student loans are borrowed money that you have to repay with interest. When that interest is capitalized (added to your total balance), suddenly a whole new storm cloud of debt will seem to be hanging over your head. Surely you know that ignoring the debt is the worst thing you can do, but it’s almost just as bad to simply wait around to make the minimum payments.

Limit yourself: Don’t borrow more than the salary you can reasonably expect to make in your first year out of school.

Get ahead: Make interest payments while still in school. This isn’t required, but your future self (and bank account) will be very grateful if you do, because of the money you’ll save in the long run.

Keep track: Know what you’re borrowing, how much, and from whom. Don’t rely on emails or paper statements from lenders. Keep an organized notebook with loan amounts, account numbers, loan start and end dates, and any other particulars so you’re never left wondering what you owe.

Look repayment square in the eye: Don’t just wait for your grace period to end and your first loan repayment bill to show up in the mail. Be proactive in picking the repayment plan that works best for you so you’ll know what you can expect to be billed every month.

If you can, go auto: Set your monthly payments to be automatically deducted from your bank account each month. Many lenders offer a reduced interest rate or other bonuses if you enroll in autopay.

Consolidate and refinance: Refinancing is a good way to decrease interest rates, allowing more of your monthly payments to go towards paying down your actual loan balance. Plus, having one consolidated loan with one monthly payment is a huge stress reliever.

The key takeaway is that the longer it takes you to pay off your student loans, the more money you’ll end up paying over time in interest. So get in a routine of paying as much as you can as soon as you can on your loans, and you’ll shave years off of your debt’s life!

 

Sources:

http://time.com/money/collection-post/3387201/student-loan-repayment/

https://studentloanhero.com/featured/ultimate-guide-paying-off-student-loans-faster/

https://blog.ed.gov/2013/05/4-mistakes-i-made-with-my-student-loans-and-how-you-can-avoid-them/

http://www.businessinsider.com/how-to-pay-student-loans-faster-2014-5

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