GOOD WAYS TO PAY OFF YOUR STUDENT LOANS
Paying off student loans after graduation is usually frustrating, especially when you’re yet to get a job or you work in a field that doesn’t get much remuneration. A lot of people freak out when they discover how long it would take to the fully repay their loans. Don’t freak out. You’re not in this alone. There are about 50 million Americans in the same student loan debt as you, and about $1.5 trillion is collectively owed.
If you’re asking how this is supposed to make you feel better, then you are in for a good read and solution to your student loan repayment.
Below are some ways to pay of your student loans and be free of debts:
Remit more than the minimum payment: Before you run off asking how this is possible when your paycheck isn’t even enough for you to live on, let me give you some motivation. It is not news that the interest on your student loan is compounded and the earlier you pay it off, the better it is for you and the lesser the interest you’d have to pay.
Let’s say you took a student loan of $20,000 to be paid back in 10 years at 6% interest rate, you will end up paying about $15,000 interest on the principal by paying $298 monthly. If you decide to increase your monthly payment by $60, you will cut down about 3 years in payment time and about 30% in interest. If you further determine to increase the payment by $88 monthly, you further cut down payment time by 2 years and interest by another 40%.
Increasing your monthly payment goes a long in helping you out your student debt. It may mean cutting down on some things, but it’d be worth it at the end.
Make payment every other week: Since most people receive their paychecks every week or every other week, it is advisable to also pay every other week. How does this work? Back to our initial example. Instead of paying $446 every month, which may seem like a big chunk of your paycheck at the time, you can split payment into two and pay every other week. This means, you will pay $223 fortnightly. At the end of every payment year, you’d have made an extra month payment by making payment every other week because, there are 52 weeks in a year, which means 26 payments, summing to a full 13month payment in a year.
Join a company with repayment assistant program: there are companies that pay you a certain amount as employer benefit towards repayment of student loans. The extra $50 or $100 they pay you monthly goes a long way in making your repayment faster.
Ask friends and family for help: This may sound cheesy, but you have to do what you have to do. Instead of getting birthday gifts, Christmas gifts and all those things from friends and family, you can ask them to convert it to funds instead, so you can use it to offset your debts.
Volunteer: Some volunteer programs assist people in repaying their student loans by working on some non-profit projects for them. You may be required to follow the regulations required to get the assistance but, it is a good way to periodically offset chunks of your loan.