Everyone with student debts wants them paid off as soon as possible. Insanely high interest rates and crippling amounts of debt stop your progress in life and prevent you from moving forward as quickly as you may want. There are a number of strategies to pay off student loans faster and at Cash Factory USA, we can help you choose the most effective ones. Read our blog today to discover the top tips to help you pay down your debt now!
1. Pay More Than the Minimum
Your loan may state that you owe a specific amount each month, but you can pay more than that minimum to get your student loan debt paid off. Any month that you have a little extra in the bank, throw it at your student loan debt and watch as it diminishes way faster than you ever thought it would. You don’t have to double your payment, but even an extra $20-50 each month will make a huge difference. Instead of going out to dinner with your friends this weekend or going to the movies, take the money you would use for entertainment and put it towards paying off student loans faster.
2. Avoid Long-Term Repayment Plans
While low monthly payments and longer loan terms may be good if you’re struggling to find a job, you don’t want to get stuck with that much more interest over time if it’s not necessary. Avoiding long-term repayment terms from the start may be a better strategy for ensuring your student loan debt gets paid off.
3. Get Help From Your Job
Many hiring managers and recruiters that want to sweeten the deal and convince you to come work for them may offer you help with paying off student loans faster. Government and public servant positions in particular are known for providing loan forgiveness. Many volunteer agencies or fields that have a high demand for new hires (like nursing) also guarantee you student loan assistance as part of your benefits package. Hunt for positions that offer these benefits or negotiate your hiring package to include student loan assistance.
When you have multiple student loans, refinancing could be the right option for you. Whether you’re dealing with several different interest rates or one of your rates is much higher than the others, refinancing allows you to bundle all your loans together under one — often much lower — rate. The reason you get a lower rate through consolidation is due to the fact that you’re more financially stable and reliable after graduating and getting a job. Many people find that they can cut their interest in half and pay much more towards the capital of their loan instead of just the interest.
The only downside to refinancing is that it affects any benefits you may be receiving from federal loans. You won’t be eligible for income-based repayment plans or loan forgiveness after you refinance. Carefully consider the types of loans you have, and which route will help you pay your student loans off faster.
5. Use Tax Deductions and Credits
It may be frustrating that you have to pay taxes in addition to the burden that student loans place on you, but don’t despair! There are tax deductions and credits that can help you out. With a student loan interest tax deduction, you get to reduce your taxable income by up to $2,500 because of the interest paid on your student loans. To qualify for this tax break, you need to meet a few requirements, including:
- Having paid interest on a loan in your name
- Having been enrolled in a college or university when you took out the loan
- Filing as a single taxpayer or married and filing jointly
- Having a modified adjusted gross income of less than $80,000
You cannot claim this deduction if you are a dependent on someone else’s tax return.
The other major deduction that can help you pay off student loans faster is for tuition and fees. You can claim up to $4,000 of your income untaxable during the years that you attended school.
Since much of your income isn’t taxed when you qualify for these deductions, you can put that money towards getting your student loan debt paid off.
6. Find Unique Discounts
Many loan companies offer you savings on your loan repayment if you participate in practices that make you more reliable. One of the biggest breaks you can get is when you sign up for autopay. Some loan services offer you up to 0.25% off your current loan interest when you enroll in autopay. Reducing your loan interest by even this small amount can make a huge difference in the long run — especially if you took out large loans or have high interest rates.
7. Freelance Work
Earning more money with a side hustle is one of the best ways to pay off student loans faster. All the extra money you make working an additional freelance job can go directly to your loans. Even a minimum wage job that you work for an additional 10 hours a week can enhance your repayment by a few hundred dollars every month.
8. Pay Off Capitalized Interest
Capitalized interest is any portion of your interest rate that hasn’t been paid off. This gets added to the balance of your loan amount and results in a higher total amount. You’ll notice that interest can accrue while you’re in school or in forbearance. If you pay off this amount before your repayment plan starts, it won’t be added to your total balance and you’ll have a much easier time paying back what you borrowed. Don’t let your interest accrue if you can help it and it will lower your balance immensely.
Cash Factory USA
Since we provide a loan service to many Americans, we know all the pitfalls that may stop you from paying off student loans faster. Avoid any traps and delays in getting rid of your loans when you follow our advice.
When it comes to finding fair rates for payday or installment loans, turn to us first! Learn more about our loan options and repayment plans when you reach out to our team today.