We all know how expensive it can be to study at a college or university in the US. The average student graduates with almost $30,000 in debt. Student loans are designed to help pay for the cost, but as the word “loan” suggests, the money will eventually need to be paid back. After graduation, a lot of students are left wondering, where to begin?
How do I pay off my student loan?
The best way to pay off your student loans fast is to pay more than the minimum amount due each month. The more you pay towards your loan, the less interest you’ll owe and the quicker the balance will go down. Extra payments will also help pay off student loan debt faster. You can even refinance to get a shorter term and save on interest.
Here are some additional tips to pay off student loan debt.
- Make extra payments. You can make additional payments at any point in the month. Make it clear that the extra payment should be applied to the current balance and to keep the next month’s due date as planned.
- Refinance. If you have a job and good credit, then you’re a good candidate for refinancing. You can choose a new loan term that is shorter than your current one and also get a lower interest rate.
- Enroll in autopay. If you allow your loan servicer to deduct your monthly payments directly from your bank account, they may offer you a quarter-point rate discount. It’s called an autopay deduction. Be sure and ask about it.
- Make bi-weekly payments. Pay half of your payment every two weeks, instead of making one full payment monthly. You’ll end up making an extra payment each year.
- Stick to the standard repayment plan. The federal government automatically puts federal student loans on a 10-year repayment plan. If you can’t make big extra payments, the fastest way to pay off the loan is to stay on the repayment plan.
- Put “extra” money towards your balance. If you get a raise at work, a student loan refinance bonus, or if you find yourself with any other unexpected cash (a gift from family, perhaps?), put at least a portion of it towards your loan and that will help you pay it down faster.
The federal government has tools you can use to help you find the best repayment strategy. A student loan calculator will help you see how fast you can get rid of your loans and how much money in interest you’ll save.
BEWARE of Companies That Promise to Make Your Loans Disappear
After graduation you may come across companies that promise to forgive your student loans. They’ll say they can make all of your student debt disappear for a small fee. For example, you have $50,000 in student loan debt and they offer to make it go away if you give them $1,000.
The problem is, it’s not real. None of it is.
These so-called “companies” advertise and look legitimate. You may see their ads pop up on social media, even billboards, but you should know it’s a scam. Don’t pay any fees for student loan forgiveness.
However, there are real student loan forgiveness programs. They are offered through the federal government and they apply only to federal student loans. They also don’t require you to pay them any money upfront. You don’t need to hire a company to enroll in any federal programs. They are free and you can get more information and see if you qualify by visiting the US Department of Education’s website.