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Tips to pay off your student debt and save some cash in the meantime
Let’s face it: finding ways to relieve student loan debt can be a huge weight on your shoulders.
The reality of student loans
Despite the stress it causes, student debt is incredibly common–especially now–among millennials. According to the College Affordability Act, more than 44 million borrowers owe $1.4+ trillion in student loan debt. Yep, you read that right: more than $1.4 trillion.
If you’re like most of us, your student loan debt accounts for a slice of that $1.4 trillion pie. And whether that slice is big or small, we recognize #TheStruggleIsReal. Each month, your bank account sees a not-so-friendly reminder that your student loan debt is real, and if you’re like many Americans, it’s not going anywhere anytime soon!
Student debt is stressful, it’s common, and it shouldn’t take over your life! That’s what we’ve put together easy tips to tackle your student loan debt once and for all. With these tips, we’ll help you navigate paying off your student loan debt and continuing your journey to financial wellness.
Take our Student Loan Calculator for a spin. Create a Debt Elimination Plan, see if you can refinance your student loans, and more!
Tips to relieve your student debt
Stay on track
Falling behind on any payments just means you will have to pay more out of pocket (and more interest) later. While it may feel like you’re gaining money or cash flow that one month you skip your payment, it’s going to really hurt you in the end. We recommend you stay on top of your billing periods and make sure you pay the correct amount each time. That way, you can avoid falling behind and paying for it later—literally!
Make extra student loan payments when you can
Do you have a little extra cash this month? Maybe from a bonus or a raise? Or, maybe you inherited some cash? Or, maybe your investments paid off? However you came across this extra cash, determine if you have enough to make another payment.
Consider using this extra money toward your student loans. This can be a quick and easy way to minimize the amount you owe each month and diminish your payment.
Not to mention, paying extra on your principal helps to reduce your interest rates. That means, in the end, you’ll wind up paying less money for borrowing the same amount! Remember, when you can prepay your loans or pay more than the minimum monthly payment without any penalty, this can often help you pay them off faster and save more money in the long run.
Heads up! Sometimes student loan servicers will add any extra payment to your bill for the following month instead of decreasing your principal. This advances your due date but won’t help you pay off your loans any faster. Make sure to tell your servicer to apply any overpayment cash to the principal loan amount.
Refinance your student loans
If you have a high credit score, a stable job, a steady income, and have a history of on-time payments, refinancing your student loans could be an option to consider.
Now, there are lots of pros and cons to this kind of decision, and we recommend you take time to consider your options and chat with a professional. For example, refinancing your loans may help merge all of your loans into one that has a lower interest rate. In this case, you may be paying a little more each month, but refinancing at a lower rate may help you pay off your loans faster 🎉.
But! Refinancing comes with its downsides.
You could also end up with a lower monthly payment, with a longer term. This means that, while you’d pay less each month, you could have a higher interest rate that would increase your total payment toward your student loans.
Refinancing is right for some, but not necessarily right for all. Take the time to review your finances and consider what refinancing your student loans would look like for you. (Psst, while you’re at it, you might also consider refinancing your mortgage, too.)
Take our Student Loan Calculator for a spin to see if you can refinance your student loans!
Enroll in autopay
If refinancing your loans aren’t your jam, enrolling in autopay can be another way to lower your interest rate. If you let your loan servicer deduct payments from your account automatically each month, many federal based student loans and some private student loans will offer you an interest rate deduction. Although the deduction is small and may not save you as much as refinancing would, it’s still a little extra savings.
Make bi-weekly payments
Sometimes the big monthly payment number can seem daunting. Some people prefer to take smaller bites when chewing on—or, well, repaying—a big loan. Making two payments each month could help you to manage your loan payment, while still paying the same amount each month. If you split your monthly payment in half and pay that amount every two weeks, the loan may seem a lot less scary and easier to manage.
There are plenty of options to pay off your student loans, just as there are different strokes for different folks! Pro tip: by staying on an every-two-week track, you will make an extra payment each year. This will also help shorten the term of your loan.
Take our Student Loan Calculator for a spin to see how much bi-weekly payments could save you!
Going to college can be one of the best times of your life, but remembering it through your student loan payments is a big 👎. These guidelines can help you to wrap your arms around your student loan debt, and finally relieve you of your loan and your stress—for good!
Watch our webinar
Want more tips from the pros? Watch this Beat Student Debt webinar with Pocketnest CEO and founder, Jessica Willis.