Six months after graduating from college, the excitement you felt has now vanished as you are plagued by your student loans. You have lots of future plans, but instead, you’re thinking of how to pay off your student loan quickly.
How, when you also have bills to pay? Especially when you owe over $35,000.00 which you need to pay for ten long years.
There may not be a way to reduce your loan amount. But what if there’s a way to make that ten years shorter? Seems impossible, but really, it’s not. Below are some effective ways to pay off your student loans quickly:
Ways to Pay Off a Student Loan Quickly
Start paying while in school
Most college students don’t realize that they can pay for federal loans while still in school. And they can do it without getting any penalty. It isn’t the most common technique, but it certainly is an effective way to pay off your student loan quickly.
The idea is simple; shorten the life of your loan by paying early. Set aside a small amount of money from your part-time or summer jobs, and use it to make pre-payments for your student loan.
Pay more than the minimum amount
Another effective way to pay off your student loan quickly is to pay more than the minimum amount. You do this by adding extra money to your monthly payments. This is ideal if you have extra cash on deck.
Note, too, that the interest is calculated based on the remaining balance of your loan. By making extra payments, you shorten the life of your loan while also reducing the interest.
Pay extra to high-interest loans
This is similar to the previous technique, but it is applicable for multiple loans.
If you have extra cash, use it to make extra payments on your student loans. This time, make sure to prioritize paying extra for loans with higher interest.
Use unexpected wealth to make extra payments
Unexpected wealth may come in the form of the following:
- a bonus you receive at work
- money won from a lottery
- an inheritance and others
While it is tempting to spend it for personal use or luxury, it’s wiser to use them to pay off your student loan.
Lump-sum payments with your cash windfall is a great way to finish your loan. Just think about all the luxury you can afford in the future once you have paid off your student loans.
It’s hard but effective
Although repaying student loans quickly is truly a difficult task, it is certainly achievable if you follow the simple ways mentioned above. You can also follow other techniques to help you achieve this goal. But it all boils down to discipline when handling your finances. Remember to prioritize your needs over your wants.