Posted by Fred Lake

Paying off student loans faster in 2019

Paying off student loans faster in 2019

Student loans are not just a nuisance for graduates today. More than 44 million Americans together have student debt of $ 1.5 billion. There is a good chance to include you are included.

Wouldn't it be nice to get rid of that debt and be able to spend money on things that interest you? The good news is there are some means you can use to repay these loans faster. Here are seven that you can try.

Convert Unexpected Revenue To Additional Payments

One of the best ways to repay student loan debt quickly is to make more than the minimum payments. Obviously "paying more" is not advice for most people. But listen to me in this case: even some exclusive additional payments can have a significant impact on your student loan balance.

It can be painful to put something fun like an unexpected return on your student's debt, but the results can be dramatic.

Don’t believe, Let's say you have a loan of $ 20,000 at 6% interest and there are ten years left to repay it. If you make an additional payment of $ 100 each year, you will pay your loan five months in advance and save $ 315 in interest.

Divide Your Payments Into Two

Another trick you can use to repay your loan faster is to split your monthly payment in two. For example, if you have to pay $ 300 at the end of each month, make a payment of $150 on the 15th and the second payment of $150 on the 30th.

"This not only makes the payments a little easier to manage, since most people get their salaries every two weeks but" paying half every two weeks is like an additional payment every year without realizing it difference.

This is because, every month, you should make 12 payments a year. However, dividing the payments for 26 weeks (52 weeks in the year, divided by two), we end up paying 13 months in the same period.

"In a typical 10-year payment program, this little trick can affect a whole year of payments (and interest)!"

Sign Up For Automatic Payment

Even if you don't have the most dramatic impact on your student's debt, signing up for automatic payments can generate little interest and help you invest more money in the main budget.

"This tactics allows the student loan administrator to deduct the payment from your bank account every month automatically. In addition to guaranteeing timely payment, some lenders may even grant a discount to sign up for".

Refinancing

If you have a very credible income and good credit, you could qualify to refinance your student loans. Refinancing involves taking a new loan and using the funds to repay the previous loan. Typically, people refinance their mortgages to get a new term, a lower interest rate or both.

For example, it is possible to refinance a 10-year student loan with a duration of seven years. This would result in higher monthly payments but would pay off the loan more quickly and save on interest. And if you can also refinance with a lower interest rate, a more substantial portion of your money will be used to settle off your balance as quickly as possible.

Take our $ 20,000 loan example above. With ten years remaining at 6% interest, monthly payments would be $ 222.

Now let's say you refinance with a slightly lower percentage of 5%. Your account will fall to $212. Not a big difference, of course. What if he continues to pay $222 a month despite the new lower account? You would take six months and $ 335 in interest on your loan. Now imagine if the interest rate gap was even greater what would happen.

Note that you must work with a lender who does not charge origination fees for the loan, which could cancel interest savings. It is also a fantastic idea to evaluate the risks of refinancing federal student loans, as this transfer to private loans and permanently lose federal protections, such as payment and forgiveness based on income options.

Participate In A Company That Offers Reimbursement Assistance

If you are looking to change jobs, it is worth looking for companies that help pay student loans as a benefit.

"More and more employers are accepting employee benefits called student loan repayments. "Unlike tuition reimbursements, where you are paid to go to school, these programs will give you money for your student loans by merely working in the company.

Volunteering

Some organizations offer assistance with paying student loans in exchange for working on non-profit projects. 

"You need to follow the guidelines and complete the program based on your needs to qualify for loan repayment assistance. "But it can be a great way to repay while hitting student debt."

Pay According To Your Strength

If you have more loan to deal with, it is useful to follow a payment strategy aligned to your personality. There are two main methods for repaying the debt: the debt snowball and the debt avalanche.

The snowball debt method is ideal for people who need to experience winnings immediately. "With this strategy, you will start paying the lowest balance first. Continue making minimum payments on other accounts and putting as much money as possible to get the lowest balance." After paying the lowest balance, combine the amount paid with this balance with the minimum payment on the next payment balance and so on. "This strategy can help you stay motivated and encouraged since you should start seeing some results right away.

If you want to conserve as much money as possible, you can try the avalanche of debts. "With this method, you make the highest possible payment of your debt at the highest interest rate each month, while you pay the minimum payments on your other debts." By focusing on interest rates instead of balances, you save more overall.

Conclusion

Keep in mind, however, that student loan debt can be annoying; it may not always be the most urgent financial problem.

"Before you aggressively pay off student loans, you should make sure you pay high-interest debts, such as credit cards or personal loans. You should also make sure you save enough for your long-term goals, think about retirement since over time investment returns have exceeded the interest rate that most people pay for student loans.

Therefore, if you have most of your financial ducks in a row and your student loans are the last thing that keeps you, of course, send them out as quickly as possible.

Fred Lake
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