Lauren Cobello » Get out of debt » 7 Things you’ve GOT to know about paying off your Student Loans
In this day and age, one of the largest items in everyone’s budget is student loans. Obviously, if you can do anything to end up with no loans or less loans, you should, but how do you battle those loans down once you have them? One of the most important things you can do it truly understand your loan, the terms, the details, etc. Many students incur loans without the full understanding that we approach other loans with.
On a side note, we had a FANTASTIC conversation with student loan expert Adam Carrol a couple weeks ago. His insights were truly eye-opening. You should definitely check that out.
If you have graduated with student debt, there are some very obvious ways to work on paying off your student loans, which have less to do with student loans and more to do with smart ways to pay off debt. And then there are a few less obvious and more unique ways to address student loans specifically.
Do Some Math. Because student loan debt can be so large, you can really treat it the same way you might treat a mortgage. You can use the same tricks of making bi-weekly payments, making lump sum payments, adding extra to the principle each month, or refinancing if appropriate. For more about these ideas, look at this article about paying off your mortgage.
Set Goals. You should also sit down to set a goal and make a plan about how you would like to approach your student loan debt. What is the life span which you are comfortable with that loan existing? You should make this plan sooner, rather than later. The earlier you begin to think about and tackle your student loans, the easier it will be to address them. In fact, if you (or your children) can start saving for or paying off the loans while still in college or before the loan reaches the end of the deferment period, you will be even better set to pay it off quickly.
Use Extra Money. As far as making payments in the least painful way, if you find yourself with a raise, instead of upping your lifestyle, up your payments and apply your raise to your loan. You can also have money taken directly out of your paycheck and put in a separate account to pay your loans. You can also do auto debit, and have your loan provider take money out of your account automatically each month. Sometimes auto debit comes with a discount of some kind.
Move in with your folks. Finally, as far as obvious options go, this may be the least popular suggestion – but you can always do something drastic like moving in with your parents and applying as much money as possible to the loan. I know many people who paid off their loan in 2-3 years by doing this. This is one of the reasons I mentioned earlier to address these loans sooner than later, because I know that later in life, something like moving in with your parents is less of an option.
Do you qualify for an interest deduction? When you are putting together your tax return, you can often qualify for a student loan interest deduction, and depending on your age, job, payments, income, and where you live, you may also qualify for for other student loan tax credits. Then, if you get a nice refund, apply it to the principle of your loan!
Loan Forgiveness Programs. Also, depending on the degree you earned and the field you are pursuing for a job, you may be able to find a job which can assist you with school loan forgiveness. This usually pertains to the fields of medicine, education, government, and public service, but you should do your research and see if anything is available in your field. You should also look into jobs which help to pay for graduate school, if that’s something you intend to pursue. Many jobs have programs which can help to pay for or entirely cover graduate school. This doesn’t help you to pay off undergrad loans, but it can certainly help to prevent yourself from incurring any more debt.
Volunteer and Crowdfunding. While the loan forgiveness programs do not apply to everyone, there are programs based on volunteering which do. One example of this is Zerobound, which helps those with loans connect with organizations to volunteer for, sponsors, and crowdfunding to help pay off student loans. There seem to be a variety of programs which have the same objective. You can also use more well known programs like AmeriCorps or Peace Corps to volunteer and have your loans addressed.
If you are burdened by your loans but not in the position to pay them off quicker, there are also income based repayment programs, which can help you make your payments fit a bit better into your budget until you are able to address those payments more head on. Just contact your lender to see what plans are available for your situation.
Hopefully, no matter what your current budget status, this article gave a few ideas about new things you can do to address those pesky loans!