Graduating from college for some students is more like a bittersweet experience.
On one hand, they are happy but deep down they are worried about their future.
Studies have shown that after college, 60% of young graduates are left to fend for themselves.
It becomes an even bigger challenge when you have a huge debt to pay off. This article was written specifically to help you pay off your debt fast.
1. Have a Time Frame
They say that time waits for no man. If you think that 4 years or 2 years of college is a long time, then you need to rethink this. Either start paying while in college. Ideally, You need to have a stipulated time to pay off the loan and the amount to be paid.
You can discipline yourself to pay off a particular amount weekly or monthly as the case may be. However, the fastest way to pay off your debt is weekly.
This approach will also depend on your earnings. Calculate the entire sum and divide it by the number of installments you want to pay. This will give you an estimated amount that should be paid weekly or monthly.
2. Offset High-Interest Loans First
If you obtained several loans and some have high-interest rates, the best thing is to pay them off first. The truth is that they will have the most amount of money capitalizing.
Loans often have minimum payments, so if you have some extra cash then apply it to those with high interest rates.
You can service other loans with lower interest rates, but your focus should be on the loans with high-interest rates.
3. Pay More than the Minimum
The best way to pay off your student loan is to pay above the minimum required payment each month.
This will increase your chances of paying it off faster. The loan company benefits more if you stick to paying off your loan based on the stipulated minimum payment.
The more time it takes to repay the loan, the more interest that will continue to accumulate. So, check your budget and find out how much extra you can add. This will help you pay off the loan faster and avoid accruing more interest after the due date.
Schedule your repayment plan to include the principal and interest. The Federal regulation allows lenders to apply your payment to late charges for loans or unpaid interest.
This simply means that if you don’t pay on time, and the due date for another minimum payment is by the corner, any payment made after that will be used to service your outstanding payments.
Private lenders also do the same thing. Prompt payment is advised.
4. Service Your Loan with Cash Windfall
Sometimes you might get some cash gift or money you never expected or was expecting but didn’t come when the need was there. At this point, you don’t need to think twice. All you have to do to is invest the money into servicing your debt.
A windfall can come in the form of lottery winnings, legal settlements, an inheritance, and so on. Don’t go spending big because there are consequences if you don’t repay your loan.
5. Stay Clear of Repayment Programs
These programs are for anyone who does not intend to quickly get out of the shackles of owing debt. What they mostly do is stretch the debt payment over a longer period of time like 10 years or more.
For instance, Pay As You Earn (PAYE) drags your repayment over a long period of time, like between 15 to 25 years. No one should tell you that it is a very slow approach to paying off your debt.
Some programs also offer to consolidate your loans. This approach is not good if they all have different interest rates. This will hinder you from offsetting those with higher interest as earlier advised.
This program completely stalls your ability to pay off the loans fast.
Another program that may likely hinder you from paying off your debt quickly is capitalized interest.
This means that your loan company combines the outstanding interest to your entire balance. This will lead to an increase in your balance and more accrued interest.
6. Look for a Company that Offers Student Loan Repayment Program
The American Student Assistance survey discovered that student loan repayment assistance will decide whether most graduates will accept a job offer or not.
This study was carried out in 2015 and 76% said it is a major determinant in accepting an offer.
It is estimated that only 4% of companies are giving out this benefit.
Some companies pay between $100 and $250 a month to service their employees’ student loans while others pay up to $2,000 annually.
So, keep your eyes on the ground and look for companies which offer student loan repayment programs.
7. Loan Forgiveness Programs
They are so many ways to get you involved in such programs. Working with a non-profit organization, government agency or other organizations will get you this opportunity.
Some states offer repayments of student loans only when you work in a sector where the state wants help.
The Peace Corps also offers some assistance in this regard. They can help you obtain a postponement of Stafford or Consolidated loans. Working with AmeriCorps for 1 year will make you eligible to get $4,725 to repay your debt.
Also, if you engage in a voluntary service with Volunteers in Service to America for 1,700 hours, you will be given about $4,750 toward your loans. If you join the military, some more loan benefits await you.
It is better to offset your student loan as fast as possible so that you can start enjoying the fruits of your labor in college.
This will afford you the opportunity to plan for your future and have a stable financial flow coming in. You can achieve other goals such as buying a vehicle or house.
The relief you will get after paying off your loan is unimaginable. You can adopt any or all these methods as the case may be.