10 Easy Steps to Help You Quickly Pay Off Student Loans

 How to pay off your student loans more quickly

 

 Given that some student loan repayment plans have repayment periods of up to 20, 25, and 30 years, it can be simple to put off paying off your student loans. You can, however, start making quick payments on your student loans right now if you don't want to take several decades to pay them off.

 Read More:10 Easy Steps to Help You Quickly Pay Off Student Loans

Important lessons learned
    After graduation, interest will be added to your principal balance less the more you pay while still enrolled in school.
    By enabling autopay, you can take advantage of discounts offered by certain student loan lenders, which can lower the total amount of interest you pay on your loans over time.
    Refinancing student loans settles your outstanding debts, leaving you with just one payment for the newly refinanced loan for borrowers with private student loans (or a combination of federal and private student loans).

1. Make Payments for Your Education 

 If you're a student right now, every little bit you can contribute now will come in handy later on. You'll have less debt when you graduate if you can manage to make small loan payments while you're still in school. Even during your six-month grace period, payments are possible. After you graduate from college, less interest will be added to your principal balance the earlier you pay off your loans.

Read More: Parent PLUS Loan vs. Private Student Loans 2024

2. Make a Higher Than Required Payment

Your repayment plan will specify a minimum monthly payment that you must make in order to pay off your loan within the allotted repayment period, depending on how big it is. You can stick to your repayment plan by paying the minimum, but there's nothing stopping you from paying more than the required amount each month. You could start to shorten the length of your repayment period by months if you can add even a few extra dollars to your minimum monthly payment.

 3. Make an Additional Payment

You can use a one-time payment of excess funds to settle your student loan debt, regardless of whether you receive a work bonus or a sizable tax refund. To concentrate on reducing the total amount you owe, you can make payments toward your principal.

Read More: How To Get A Student Loan Without Your Parents 2024

4. Turn on Autopay

Nothing compares to "set it and forget it." As a perk for adhering to your repayment schedule, some student loan providers, including federal loans, provide autopay discounts that could reduce the total amount of interest you pay on your debt.

5. If at all possible, follow the standard repayment plan.

You are immediately enrolled in the Standard Repayment Plan upon graduation, which is designed to assist you in repaying your loans over a ten-year period. You will pay the least in interest over the course of your repayment period with this plan, which is also the fastest one available. Contrast this with income-driven repayment (IDR) plans, which, depending on the plan, have longer repayment terms of 20 or 25 years. 

Read More: Subsidized vs. Unsubsidized Student Loans: Which Is Best in 2024?

Fast Fact:Remember that IDR plans usually result in lower costs when compared to the Standard Repayment Plan. When borrowers enroll in IDR plans, they typically prefer cost-effective payments and/or Public Service Loan Forgiveness (PSLF) to speedy loan repayment. Furthermore, the Standard Repayment Plan bases its monthly payments on the division of your outstanding loan balance by ten years, while the IDR plans normally calculate their payments as a percentage of your discretionary income. Because of this, every one of the 120 payments in the Standard Repayment Plan is the same every month, while the IDR plans are subject to annual adjustments based on changes in income and family.
Newly introduced IDR plans, like the Save on a Valuable Education (SAVE) plan, forgive debt after a predetermined number of payments and, in certain situations, grant credit for deferment or forbearance periods.

6. Utilize Benefits for Employees

Certain positions and businesses provide benefits for matching student loan repayment. Up to a set amount, they will match your monthly payments. Through 2025, employers can provide tax-free student loan repayment benefits to employees up to $5,250 annually. While not all employers match student loan repayment, you might want to find out if they offer any additional benefits of this kind. You might be able to pay off your debt much more quickly.

Read More:What You Need to Know About Student Loan Servicers-2024

7. Look for a Supplementary Revenue Source

If you're having trouble saving up extra money for your student loans, think about making a hobby into a side business or using your free time to participate in the gig economy. You could walk dogs, deliver groceries, sell handmade goods online, and so on. You can use your secondary source of income to reduce your student loan debt if your primary source of income is already being used to pay your other bills. 

Read More: The Effects of Canceling Student Loans USA-2024

8. Update Your Budget

It will probably take you longer to pay off your debt if your budget calls for you to only make the minimum payment each month. Adjust your spending to prioritize paying off your student loans more quickly if you have the resources to do so. This could imply spending less on other expenses like eating out, traveling, or shopping. You will be able to pay down your student loans more quickly if those funds are freed up. 

9. Verify Your Tax Deductions

Depending on their modified adjusted gross income (MAGI), borrowers may be able to deduct up to $2,500 in student loan interest payments from the previous year. This can be applied to both federal and private student loans, and you don't have to itemize deductions to be eligible. You then use this tax deduction to make additional payments on your student loan. You may be qualified for additional credits and deductions. 

Important Notice:For taxpayers with higher incomes, the student loan interest deduction is gradually reduced and eventually eliminated. The MAGI phaseout for head of household, single, and qualifying widow(er) filers starts at $75,000 and ends at $90,000 for 2023. The MAGI phaseout ends at $185,000. If you file jointly and are married, it starts at $155,000. If your MAGI exceeds the maximum amount, you are not eligible to claim the deduction.

10. Consider Financing Again

You might want to consider refinancing your student loans if you have private loans or a combination of federal and private loans. When you refinance, you take out a new private loan to cover the balance of your old loans, and you only have to make one payment on the new loan. Make sure the interest rate you're paying is less than what you can get, and base your repayment schedule on what you can afford. There are various student loan refinancing companies available, each with varying interest rates and benefits.

Read More: How to Apply for Student Loans-2024- The beginning to obtaining the loans required for graduation

Refinancing results in the loss of all federal benefits and protections, including PSLF eligibility and deferment and forbearance options. Keep this in mind. If you don't intend to use federal benefits, then only go this way.

How Should Student Loans Be Paid Back?

Paying more than the minimum payment is arguably the best (and fastest) way to pay off your student loans. The total amount of interest you will pay back on the loan reduces as you pay down the principal balance.
Read More: Private vs. Federal College Loans: What's the Difference- 2024?

What Is the Average Time Taken to Repay Student Loans?

It took respondents of a 2013 One Wisconsin Institute study 21 years on average to pay off their student loans, even though the Standard Repayment Plan has a 10-year repayment period.

Just one Wisconsin Institute. "The National Economy's Effect of Student Loan Debt."

Is There a Drawback to Early Student Loan Repayment?

Early repayment of your student loans may have drawbacks. Any further loans you take out after paying off your student loans quickly might have a higher interest rate than they otherwise would. By making you pay more interest up front, lenders hope to offset the risk that you will also pay off the new loans sooner than anticipated, which would keep them from making more money from interest payments.

The Final Word

Although repaying your student loans might seem overwhelming, there are a few strategies you can use to get them paid off faster. Make sure you update your budget, set specific goals, and make use of tax breaks for education and employer-provided benefits.

You'll have more money for yourself after you've paid off your student loans if you put more effort into doing so now.