The average college student has over $30,000 in student loans upon graduation. While that usually means a college degree which is going to open some doors professionally, and a higher income down the road, this is also a serious responsibility and a matter that deserves all your attention.
Just like paying off a balance on a credit card for a holiday that is long gone, paying off student loans 15 years after your graduate is not any fun. So there are options to tackle them as soon as possible and get started with your other life goals.
Whether you have federal, private student loans, or both, the first step is to know how much you owe and how much you will have to repay each month. Your student loan provider should be able to send you a clear statement, with the monthly payments, the total owed, and the interest rate.
There are two ways to pay off your student loans quicker, which can be done by making overpayments and reducing the interest rate on what you owe. If you manage to get easy installment loans and keep making the same payment, what you used to pay in interest will be applied to the principal of the loan, hence reducing the amount owed faster.
It is pretty easy to refinance student loans, a company like Credible allows you to compare prequalified refinancing offers for free, without damaging your credit score.
You just enter your personal details, which are not shared with potential lenders, then sort and compare the offers to find the one that is the best fit for you, and finally import your loan information automatically.
Once that is all entered, you get a final offer within a business day. There is no service fee, no origination fee, and more importantly, no prepayment penalty. Paying off your loans early can save you hundreds, if not thousands in interest, and can also drastically reduce the life of your loan.
You can refinance your federal student loans, private student loans from your bank or school, and ParentPLUS loan.
Now that you have the best deal possible, how do you get rid of your loan as fast as you can? Well, it takes time and effort, but it is really worth it. If you are not convinced, ask a 40-something who is still paying off for college from 20 years ago how he feels.
The sooner you pay off your student loans, the sooner you can use that cash to invest, buy a house, save for retirement, or plan for other big money goals.
You were used to living like a student in college right? Roommates, a beater car, ramen noodles? Now that you are earning a full time salary at your graduate job, it is going to be very easy to succumb to lifestyle inflation. After all, you work hard, you deserve a treat once in a while. True, but in moderation. Because treating yourself at the expense of paying off your debt might mean having to work longer to pay for all this.
There are also apps that round up your purchases and allow you to send the balance to your student loans. Or you could switch to bi-weekly payments instead of monthly payments, resulting in 13 payments a year instead of 12. There are many options, and if you use an online calculator to find out how much all these little amounts would add up to, you might be surprised. They can make a big difference.
I was lucky in that I didn’t have student loans after I graduated. Tuition is relatively cheap in Canada, I paid what I could and my parents paid the rest.