According to the Federal Reserve Bank of New York, student loan debt has reached over $1.5 trillion. The average student loan debt per borrower is over $37,000. Student loans are more in demand than any other loan in America.
It is important to tackle your student loan debt as quickly as possible. The most effective way to pay off student loans fast is to pay more than the minimum payment in any way you can. The more you pay down the principal balance, the less you’ll pay in interest overall.
Do you dream about paying off your student loans fast? So does pretty much every student in America.
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How to Pay Off Student Loans Fast
The best way to pay off student loans fast is to pay more than the minimum each month. The more you pay toward your loans, the less interest you’ll owe — and the quicker the balance will disappear. So, here are creative payoff strategies to help you pay down your student loans faster:
1. Make extra payments the right way
In order to make extra payments, check with your lender about the existence of any prepayment penalties. If there are no prepayment penalties then this is one of the easiest ways to reduce your debt.
Just take the payments you have and add extra money to the payment to be made. You should already have payments set up, so anything extra goes straight toward your principal.
2. Refinance if you have good credit and a steady job
Refinancing student loans can help you pay off student loans fast without making extra payments.
You’re a good candidate for refinancing if you have a credit score in the high 600s, a solid income and a history of on-time debt payments. If you’re using federal loan benefits like income-driven repayment, refinancing may not be for you.
Refinancing student loans replaces multiple student loans with a single private loan at a lower interest rate. You can choose a new loan term that’s shorter than the one you originally received. That may increase your monthly payment, but it will help you pay the debt faster and save money on interest. You’ll also have just one bill to pay, rather than multiple.
Refinancing your student loans is a great way to manage your student loan debt, it is advised to have in-depth knowledge about it before you jump into refinancing.
For example, refinancing $50,000 from 10% interest to 5.0% could let you save $15650 which can be used in the prepayment.
3. Enroll with autopay
Many loan servicers offer an interest rate discount of 0.25% when you enroll in automatic payments. This is a small amount but can add up to some major savings over the life of your loan.
Plus, autopay is generally a good idea, as it decreases the chance that you’ll get into trouble by forgetting a payment.
For example, Dropping a $10,000 loan’s interest rate from 4.5% to 4.25% would save you about $144 overall, based on a 10-year repayment plan. But that’s still extra money to help pay off student loans fast.
Contact your servicer to enroll or find out if an autopay discount is available
4. Make biweekly payments
By making bi-weekly payments, the frequency of payments being done increases. If these payments are contributed towards your loan forgiveness then you can have your loans forgiven faster.
Many loan servicers offer an interest rate discount of 0.25% when you enroll in automatic payments. This discount is a small amount, but can add up to some major savings over the life of your loan.
Plus, autopay is generally a good idea, as it decreases the chance that you’ll get into trouble by forgetting a payment. Talk to your servicer about any interest rate discounts they offer that you can benefit from.