A college education is important, but there's no denying that monthly student loan bills can quickly empty your wallet. However, here are some steps that may help pay down the loan faster and cheaper, giving you a little breathing room in your budget.
1. Make a realistic budget
This may seem like a simple step, but having a realistic budget that works with your monthly income is essential. Following a workable monthly financial plan keeps your payments on track and helps prepare for unforeseen costs that may arise. Make wise money moves for your future with online banking — it’s easier than ever to account for every cent in your paycheck.
2. Explore income-contingent repayment
Sometimes your monthly payment simply exceeds what you can afford. If this is the case, the federal government offers income-contingent repayment plans (ICR) to those who qualify. There are several options available that may lower your monthly payments while extending the repayment schedule. Visit studentaid.gov to learn more about these programs.
3. Apply for a job with student debt forgiveness
Several public sector jobs offer student debt forgiveness, including federal and local government positions. There are also some student debt forgiveness programs designed for doctors, nurses, lawyers and other professions. However, be aware that these positions generally have strict rules in the employment contract, such as an agreement to work for a specific amount of time.
If you’re currently employed, ask your human resources department about any benefits they offer to help with your student loans. Some companies offer student loan debt repayment programs similar to a 401(k) plan.
4. Be smart about extra payments
There is no penalty for paying more than the agreed monthly amount on your student loans. Doing side work for extra money to pay more than your usual bill is a smart move. This helps you pay off your loans sooner than projected and reduce your interest over the life of the loan.
If you want to do this, you should ask your student loan service about applying any overpayments to your current balance. Some services take that extra money and apply it to your next payment, which does not speed up the process.
5. Sign up for autopay
If you have a steady income, you may want to explore autopay. Federal student loan services provide a small interest rate discount if you enroll in autopay. That small amount can add up to large numbers over the lifetime of your payment plan.
6. Consider refinancing the loan
Refinancing your student loans into a private loan could be an easy way to lower your interest rate. If you have a stable job or a decent credit score, ask your bank or credit union what refinancing options are available to you. Taking this step may save you thousands and pay the loan off much sooner, but pay attention to the terms of the refinancing loan and be aware that you may lose eligibility for federal programs.
Although student loan payments can be stressful, some options may help. Remember: Always do your research and plan carefully. If you are interested in more information on student loan refinancing or consolidation, check out our guide.