How To Pay Off Student Loans Fast

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It takes years – and sometimes decades – for borrowers to finally pay off their student loans.

In fact, a 2019 New York Life study found that it took the average respondent 18.5 years to pay off their student loans, starting at age 26 and ending at age 45.

Your debt settlement curve has a lot to do with your specific circumstances: the size of your bankroll, your interest rate, your income, and your other monthly expenses. However, there are some steps borrowers can take to expedite the process.

Below, Select outlines three tips for quickly paying back your student loans – and what you should be aware of before you rush to pay off this credit long before your loan term expires.

1. Pay more than the minimum amount due

Perhaps the most obvious, but paying more for your student loans is the most effective way to get rid of them quickly.

Whether you’re paying $ 20 or $ 100 more each month, every little bit more than the minimum payment will really help keep your debt down. If you haven’t already spent your third stimulus check or are expecting a tax refund this year, you could use these cash gifts towards your student loan debt. Just make sure that for any additional payments you select the option that will use the funds on your loan amount.

Here’s how to increase your income so that you can pay more than the minimum

If you don’t currently have the extra cash to increase your monthly student loan payments, but you are determined to make paying off your balance a priority, you should consider investing that extra cash in some sideline activity to use the extra money for pure capital payments. Nowadays it’s easier than ever to make some extra cash.

Use apps like TaskRabbit or websites like Craigslist to find quick gigs to do in your spare time.

With spring cleaning around the corner, consider reselling your old items online through the Facebook marketplace, offering to clean your neighbor’s house, or help with landscaping as the summer begins.

Do you have special knowledge on a certain topic? Discover tutoring virtually from home through online services such as Chegg Tutors. Online tutoring can also take the form of teaching skills such as crafting, cooking, music, language, and fitness classes. Check out resources like Skillshare for a variety of different teaching options and Verbalplanet if you want to become a language teacher online.

You can get paid to take consumer surveys online through sites like Survey Junkie, Swagbucks, and Vindale Research in the comfort of your home.

2. Sign up for Autopay to receive an interest deduction

Registering for Autopay with your student loan service provider is child’s play: you are guaranteed not to miss a monthly payment (which is important for building your creditworthiness) and most loan service providers even offer an interest discount of 0.25%. when you sign up for automatic payments.

While a 0.25% reduction may seem small, if you spend years paying off your student loans, that is a significant amount of savings over time. Any lowering of your interest rate will help you pay off your loans faster as it will lower the overall cost of your loan.

3. Refinance your student loans

To refinance your student loan, you will need to exchange your current loan (s) for a brand new loan through a private lender. The goal of refinancing is to get a lower interest rate while being able to choose a new loan term.

For example, a borrower who qualifies for a refinance can cut their loan term from 10 to five years so they can pay off their student debt faster. While this shortened schedule would require higher monthly payments from the borrower, he would pay off his student loans in half the time.

Select analyzed and compared refinancing options for private student loans from national banks, credit unions, and online lenders to evaluate your best options. Here are our top tips for the best student loan refinancing companies:

Refinancing is generally a good option for student loan borrowers with good or excellent credit who pay a high interest rate on their loans. However, with payments and interest on the federal student loan paused until at least September 2021, now is not a good time to refinance your federal student loan. However, private student loan borrowers may be able to get a lower interest rate that makes refinancing worthwhile.

What to consider before early repayment of your student loan

It is not always a good idea to pay off the student loan early. Some financial goals should be given higher priority, such as: B. Saving or repaying higher-interest debts.

Make sure to check the boxes below before you expedite the repayment of your student loan debt:

  • You have already set up a type of savings / emergency fund: Make sure you set aside any savings before you dedicate additional funds to repaying your student loan quickly.
  • You have no outstanding credit card debt: The interest rate you pay on your revolving credit card balance is much higher than the interest rate you pay on your student loans, so take care of your credit card debt first.
  • You’re contributing enough to meet your employer’s maximum retirement plan: If your company has a 401 (k) matching program up to a certain post, you should prioritize your post to meet it. This is essentially free money that stays on the table when you are not using the game.

Note to editors: The opinions, analyzes, reviews or recommendations expressed in this article are solely those of the Select editors and have not been reviewed, approved or otherwise endorsed by third parties.

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