To a majority of American young-adults, a student loan is a life saver. It’s thanks to it that so many determined and not financially well-off students get to study in colleges of their dreams, get a quality education and a promising future. But, it’s after benefiting from it that reality checks in – paying off the loan. Since these loans are known to attract a significant amount of interest rate hence derailing one’s financial well-being, the best way to lead a student loan-free life is by paying the loan as quickly as possible. You must be wondering if that can really be achieved. The answer is Yes. Here’s how to go about it:
Understand your Loan:
Understanding your loan basically refers to the ability to comprehend all of the necessary information regarding the amount of money owned as well as the terms of the loan, how much you’ll be able to pay per month and how much interest will be earned throughout this time. Once you’ve understood all of these details, you’ll be better equipped to come up with the best repayment schedule.
Make a Budget:
Having just cleared college, you should concentrate more on repaying all of your debts before starting to make any future investments. Thus, when coming up with a budget, forget about making big investments such as buying property – as these are the kind of investments you can make later on. Instead, focus more on paying off your loans before they start to escalate.
Start Repaying the Loan While Still in School:
If you can, it’s best that you start repaying the loan while you are still in college. This is something that you can do more so if you have a part-time job or an alternative source of income. By so doing, come the time of your graduation, the loan balance will be a lot lower and if you end up getting a well paying job thereafter, you can have the balance paid off in less than five years.
Never Miss a Payment:
Always make sure that you regularly pay off a fraction of the loan come the end of the month. Since it possible to forget, opt for an auto-debit mode of repayment; whereby a given amount of money is automatically deducted from your bank account at the end of the month to repay the loan.
In addition to this, try to pay not just the required amount but as much as you can. The reason for this is, the more you pay, the faster you finish the loan. Also, you may try making bi-weekly rather than monthly payments.
Ask for your Employer’s Help:
Since some employer offer assistance – in form of benefits to their employees, you should check if your employer also does the same. Examples of benefits packages offered include offering $10,000 to government employees to go towards repayment of their student loans, loan forbearance and forgiveness, loan forgiveness after 10 years of regular paying which is offered through the Public Service Loan Forgiveness Program or, other custom-made benefits which are offered by private employers.
The Peace Corps and the AmeriCorps, which are America’s largest volunteer programs, offer partial loan cancellation to its volunteers. For instance, volunteers can have up to 70 percent of their Perkins loans cancelled.
It’s hence clear that the ultimate way to pay off your student loan quickly is by planning, staying updated and obviously, being goal driven.