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The first important step towards paying off your student loans is to make a budget. This isn’t just an important part of repaying your loans, it’s a critical part of achieving financial independence. When you have a budget, you can allocate money for repaying your student loans and everything else you need to pay for in life. A budget will not only help keep your spending under control, it can serve as a road map for achieving your short- and long-term goals.
Get into a better repayment plan
If you do nothing, you will automatically be put into the 10-year Standard Repayment Plan. As you could guess, you’ll have 10-years to repay your debts with a fixed monthly payment. But that might not be your best option. There are a variety of other repayment plans including Extended Repayment, Graduated Repayment and Income-Contingent Repayment. You should check these out, as one of them could be a much better option – and with lower monthly payments – than the 10-year Standard program.
Ask your employer
This won’t help with current loans but if you’re planning on going on to grad school, your employer might be willing to pay for it. While colleges are most likely to offer this benefit, there are other companies that have pay-for-school programs. Even if your employer doesn’t have such a program, it wouldn’t hurt to ask and you might be surprised at the answer.
If you do have multiple federal loans you might be able to save money with a Direct Consolidation Loan. The interest rate on these loans would be the weighted average of the interest rates on your existing loans rounded up to the nearest 1/8th of a percent. This means it would be higher than your lowest interest rate but lower than your highest. Plus, you’d have many more years to repay the loan so would have lower monthly payments.
Sign up for auto-deductions
If you were to enroll in auto-deduction, your loan servicer will automatically deduct your payment from your bank account every month. The benefit of this is that some loan servicers will give you a discount just for enrolling.
Volunteering in the Peace Corps or AmeriCorps would help you pay off your student loans while doing some good. Both these programs offer some type of education award or partial loan cancellation, plus they will pay your living expenses during the time you’re serving.
Talk with your co-signer(s)
The odds are that the co-signer on your student loans was your Mom or Dad. This means they’re probably also responsible for them. Since they were there to help you attend college, they might be willing to help you succeed in life. If you’re having a tough time repaying your loans, your parents might be willing to supplement your payments or match your funds.
Pay More Than Required Each Month
This might be a bit obvious but the fastest way to get rid of those student loan debts is by paying something extra every month. As you may know when you make a payment, you first pay off whatever interest accrued since your last payment and the rest goes to reducing your principle balance or the amount you owe. If you pay more than required, you could have the extra amount used to pay down your loan principle.
There are programs and websites where you earn rewards for paying down debt or spending money. In some cases, the money you earn can be used to pay down your loans. In fact, some of these programs are education specific so you put any credits you earn directly to paying down your debt.