There are over 44 million people today who have to pay off their student loans, reaching a collective debt of $1.5 trillion. That’s almost six times the revenue of Apple Inc (NASDAQ: AAPL).
You aren’t in this battle alone, as most students today will have to deal with some form of student loans. Keep reading to find out our best strategies to pay off your loans as efficiently as possible.
1. Increase Your Monthly Student Loan Payments
While this may sound completely contradictory, it’s more practical than it seems. By increasing your monthly student loan payment slightly, you can save on interest costs in the long run. Use a loan prepayment calculator to see exactly how this works. In short, it will give you the same interest rate but with a reduced principal.
2. Refinancing Your Loans
This allows you to combine federal and private loans into a single student loan. Not only does this make your life a little simpler, it will create a lower interest rate in your single student loan. It also allows you to have one monthly payment and only one student loan servicer. This applies to federal student loans as well as private student loans.
Your new interest rate will be available online to check for free without any impact on your credit score. By having this lower interest rate, your student loans can be paid off much faster.
3. Continue The Lifestyle Of A Student After College
You may have graduated from your university and reached the next stage of adulthood, but it’s no time to rent an apartment of your own. Continue to live with roommates for as long as possible to avoid any unnecessary spending.
Try to get by on groceries instead of eating out every meal. An average meal at a restaurant will cost you $10-$12 dollars, so bring your lunch to work instead. In doing so, your current income can be solely focused on getting rid of your student debt as soon as possible instead of using it to live large.
4. Use The Right Tools
You can also cut costs in other easy ways, such as through avoiding ATM fees. Use an online financial tool such as MoneyLion to avoid ATM fees, overdraft fees, or monthly service fees. MoneyLion is available through 55,000 fee-free ATM’s across the globe. These 3 percent charge fees will add up, and unconsciously drain your money.
5. The Snowball Method
This Debt Snowball Method has been known to help students roll student debt out of their lives. Start by creating a list of all your student loan from smallest to largest. As time passes, you’ll "snowball" the money toward the smallest balances, paying the minimum payment on the rest of your loans. As the smallest balances begin to melt away, you will have fewer loans as months go by. This will allow you to attack all your debts with equal strength.
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