Post-College Finance: How to Repay Your Loans Faster
Tuesday, May 10, 2016, 6:00 AM | Leave Comment
Paying back student loans is one of the first responsibilities a new graduate faces once in receipt of a diploma.
Statistics show that students leave college owing an average of over $27,000, with some on the hook for more than $55,000.
If you’re one of the millions of graduates now looking at repaying thousands of dollars in loans you took out for your education, you might think speeding up the repayment process would be nearly impossible.
Luckily there are some relatively simple and painless steps you can take to more quickly rid yourself of debt and focus on other financial goals.
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Refinance and Consolidate
Getting a lower interest rate on your loan is an excellent first step toward repaying it more quickly. When you refinance, more of the money you pay each month goes toward the principal loan amount rather than toward the interest.
You’re eliminating more of the meat of the loan rather than the gravy, so to speak. Likewise, consolidating several outstanding higher-interest loans into one lower-interest payment will save you money over the long term.
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Put Extra Money Toward your Monthly Payment
Any extra money you pay toward your loan each month, whether it is $20 or $200, goes toward the principal loan amount.
Since the loan’s interest is figured on the remaining principal, you’ll be paying less interest each month and thus will reach the payoff date sooner than you would have if you’d stuck to the minimum monthly payment.
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Cut Back on Your Budget
You may think you don’t have any extra funds in your budget, but with some brainstorming, you should be able to find a way to apply more money to your loan.
You might need to find a cheaper place to live or cut out some extras like cable television or a daily coffee stop.
Carefully record what you spend in a month and look for ways to decrease your expenses.
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Look for a Job that Offers Student Loan Forgiveness
Some careers provide you the opportunity to see your student loan at least partly forgiven, if not fully removed.
Typically lower-paying careers offer this incentive to attract employees who might otherwise ignore the profession in favor of higher-paying jobs.
Teachers, nurses, public servants, such as police or fire officers, and even some federal government employees can have their loan amounts reduced or completely wiped off the books.
No matter how much student loan debt you have, there are ways to repay it more quickly than you might think. Once you’ve accomplished this, you’ll be more financially free to invest, buy a home, or perhaps take a lower-paying but more satisfying job without having student loan debt hanging over your head.
For more information and advice talk to a Morrison & Muff bankruptcy attorney. Soon you’ll be out of danger and in a better position for freeing up your finances.
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