One of the most challenging barriers to wealth is student loan debt. Millions of Americans will default on their loans at some point in their life. Some people spend their entire lives paying back student loans and it can be a weight around your neck! By tackling your loans and paying them down aggressively and quickly, you unburden yourself of the debt and can begin to allocate those funds towards your long-term financial goals. Here’s our top tips to help you pay down your student loans quickly!
Make Extra Payments
There is no penalty for paying your student loans early or paying over the minimum. Be sure that you notify your student loan servicer that you want the increased payments to applied to the current balance and not the following month’s payment. This will help you pay off your debt at a much faster rate. If you owe $20,000 with a 4.5% interest rate, by paying an extra $200 every month you can be debt-free more than 5 years ahead of schedule on a 10 year repayment plan.
Refinancing can be scary, especially if you’ve never done it before. But by refinancing your student loan, you can pay it off faster by increasing your payments and shortening the length of time for repayment. This also saves you thousands in interest. Only do this if you have good credit and a stable, steady job.
Many federal student loan servicers offer a .25% interest rate decrease when you opt for autopay. It won’t save you thousands, but it will help in the long run.
Opting for biweekly payments ensures that you’ll make at least one extra payment a year, shortening the time it takes to pay off your student loan and decreasing the interest you’ll pay over time. Just make sure you rearrange your budget to accommodate the changes!
These simple steps can help you tackle those loans and pay them off at a faster rate, saving you time and money that could otherwise be allocated towards investing in your portfolio, adding to your 401k, and increasing your life insurance policy. Escaping the rat-race means clearing away the debt, and student loans can be the first one to go on your list!