In many ways, the possession of a college degree is invaluable. You put in all the work, sacrificed, and are now a member of an elite population in the United States, where some 42% of those under age 25 have a college degree of some type. But, oh those student loans! We feel your pain. It’s wonderful that college is out of the way, but you still must eat, pay bills, etc., and these loan payments are cramping your style.
Well, check out these smart student loan payoff strategies, and see if you can’t, sooner rather than later, put this issue behind you.
What is a Student Loan?
Student loans aim to help students pay for their post-secondary education and related expenses. Other than tuition, those costs can include textbooks, supplies and any living expenses.
How Can I Pay Off My Loans More Quickly?
Make Extra Payments. If you can handle it, it’d be great if you could make an additional payment, if not every month, then every other one. What you want to do is shrink your balance, which also reduces your loan period and accrued interest. Go over your budget and see where you can cut back.
Put Money Aside. Just as you have, at some point, set up a fund for a car, house, or whatever else you wanted, you can do the same with your student loans. It would be best to establish a separate savings account just for this, preferably one with a high yield, so that you won’t be tempted to spend the cash on something else.
Create a Budget. Doesn’t nearly every financial tip list seem to include this tip? Well, it’s important. So, if you haven’t done so, now’s the time. For one thing, you can see where your money is going so that you can get your spending under control.
Refinance Those Loans. Your student loan interest rates may be the chief culprit. If that’s the case, there’s no real downside to student loan refinance. What is refinancing? Here, a private lender pays off your existing loans and issues you a new loan with new terms, including a lower interest rate. You can refi more than once, and if you go through Juno, you needn’t refinance all your various loans at once.
Get Your Discounts. If you establish auto payments, most lenders give you the option of a 0.25% to 0.5% discount on your student loans. What’s more, some private lenders offer other interest rate discounts if you, say, take out an additional loan with the same lender, or make a certain number of on-time payments. Talk to your lender about what’s available.
Get Your Tax Deductions. According to federal law, you can deduct up to $2,500, depending on your adjusted gross income, on your taxes for interest paid during the year on your federal and private loans. A reduction in tax outlays could free up some extra cash to pay down your loans. Talk to your tax person to be certain you’re taking full advantage of tax benefits associated with your college education. Make sure you’re not missing out on this chance to ultimately pare your loan debt.
Now that you’ve indulged these smart student loan payoff strategies, you can cobble together a plan that can let you see the light of day, in terms of ultimately clearing those loans. And remember, if you go the refinance route to help with your higher-interest loans, we’ve found that Juno can get you the best rates.