Got student debt? You and 44.7 million other Americans. The 0% interest on federal student loans has helped a lot of people weather the economic difficulties spurred by the lockdowns. But you still might be looking at a lot of student debt that you don’t want.
You may be keeping a close eye on what President Biden is doing about student loans in the coming months. One of his campaign promises, and a subject that he’s touched on several times since he’s been in office, is to forgive $10,000 of student loan debt per borrower. Whether this happens or not remains to be seen, experts are divided on the legality of the move.
However, whether your loans are reduced by $10,000 or not, you still might be looking for ways to pay them off faster. Let’s look at a few tips.
1. Sign Up for Automatic Payments
Wouldn’t it be nice to get a small discount on your loan payments? There’s an easy way to do that as well as ensure that you never forget to make a payment (and thus incur penalties).
Just set up automatic debit payments with your loan servicer. Most loan servicers will offer a 0.25% discount for doing so and your payment goes out on time every month like clockwork.
2. Refinance Your Student Loans
There’s a possibility you could save money on your student debt by switching to a different lender. Online sites allow you to quickly compare various loan companies to find who can offer you the best rate.
One word of warning if you have federal loans — think carefully before you do this. Federal loans offer benefits such as income-based repayment plans and the potential for loan forgiveness that are not offered by private lenders. However, if you are and expect to continue being on top of your loans, refinancing could be a great money-saving move.
3. Pay Extra
If you only pay your minimum payments, you won’t pay your loans off any faster. Plus, you’ll spend thousands of dollars more in the process on interest. If you’re really committed to getting out of student debt, you’re going to have to pay as much as you can afford every month.
Make a budget, if you don’t already have one, and analyze it. Figure out how much you can currently afford to put towards your debt. Look to see if there are extraneous expenses you can cut and put towards paying off your debt faster. You could also start a side hustle to boost your income and watch those loan balances fall.
Don’t forget to save at least $500 for a rainy day. You don’t want to sit with $0 in your bank account. Otherwise, you might have to take out a loan or use a credit card for an emergency expense which will only take you a step backward.
Say Goodbye to Student Debt
Whatever happens with the government, there are still plenty of things you can be doing to get out from under your student debt. Put these tips to the test and watch your balances start to fall now!