Paying off student loans faster is important to your ongoing financial health. Here we dive into 5 ways you can pay off student loans as fast as you can. You can even pay them off in 5 years if you stick to these methods.
1. Refinance Your Loans
The best way to pay off student loans fast is to refinance your loans. Many students when first applying to loans are given high Federal interest rates. Refinancing your loan with a third party lender helps by lowering your interest rate, thus saving you a lot of money over the long run while you are paying off the loan. Furthermore you can simplify your loans by grouping all of them into one sum under one interest rate with the new provider. Not pursing a lower interest rate is leaving money on the table, money that could be used to pay off your loan quicker.
2. Don’t Settle for the Minimum Payment
The second best way to pay off student loans fast is to never settle for the minimum payment. Set minimums are often lower then the amount that you should be paying off. In the Federal Governments or Private Lenders eyes, the longer you pay, the more interest they earn. If you only pay the minimum, then it is going to take longer to pay off your loans.
LETS DO MATH. Lets say your loan is $30,000 (I know must be nice) at a 6% interest rate over 10 years. This makes your minimum monthly payment $333. This would make the total lifetime cost of your loan equal to $39,967 over 10 years! Over $9k more then your original loan. Now lets say you paid $200 more a month to your minimum. This puts your monthly student loan payment at $533 a month. If you were to do this then the total lifetime cost of the loan would be $35,449 over six years. More then $4,000 less then if you only paid the minimum.
Use this student loan calculator to find out how long it will take to completely pay off your loans at your current rate.
Check out this article to learn how to save money as a college student!
3. Financial Sacrifices
The third best way to pay off student loans fast is to make financial sacrifices. This is not what you want to hear but it is what you need to hear. Buying Gucci and Starbucks everyday will not help you pay off your student loans. I wish it did but it does not. Cutting costs like daily coffee runs, unneeded subscriptions, UberEats, horses, etc, all add up at the end of the month. These savings can be contributed to paying off more of your loan(s) in a timely manner. We talked before about not just paying the monthly minimum, well this is a good way to add more money to that payment.
4. Side Hustle to Pay Off Student Loans
There are numerous creative ways to make money at home that don’t require flipping burgers or making coffee (not that there’s anything wrong with that). These creative ways will end up allowing you to pay off your student loans faster.
The link below highlights some easy ways to make money at home which can be used to pay off your loans.
5. Utilize Great Lakes Student Loans
I want to start off by saying that we are not being paid by Great lakes to include them in this list. That being said, Great Lakes is an excellent option for students or recent graduates to easily manage their loans. They offer a variety of different repayment options at low interest rates. They also have mountains of tools to help their clients (you) better understand their loan options. Tools like a repayment planner and a knowledge center to answer any questions you may have.
If you would like to learn how to save money, check out the linked article
I hope you learned how you can pay off student loans faster and will utilize these methods to achieve your financial freedom. Thank you for reading, please subscribe if you would like to be notified on new articles. THANK YOU!