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7 Ways to Pay Off Your Student Loans Faster

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You’re probably familiar with the staggering stats about student loans today—borrowers now owe more than $1.5 trillion combined. And the 2018 class was the most indebted in history: 70 percent graduated with student loans, and the average balance was $29,800, according to Student Loan Hero.

Odds are, you have some yourself. And that burden can weigh heavy. Fortunately, there are ways to put a big dent in your balance quickly—or even have them paid off for you.

1. Seek Out Company-Sponsored Support

PricewaterhouseCoopers made headlines a few years ago when the accounting firm announced it was giving associates and senior associates $1,200 a year toward student debt. The trend is catching on and now more companies than ever are offering student-loan repayment perks in addition to many of the standard benefits employers already offer.

If you are arguing your case with your employer, take it from Kevin Fudge. He’s a government relations and community affairs manager at American Student Assistance. Kevin recommends pointing to state legislatures that are exploring tax incentives for private companies. Why? Because many of these companies are now offering loan assistance as an employee benefit.

2. Research Career-Based Options

Depending on your chosen field, you may be eligible for a specialized repayment assistance or forgiveness program. These are common for law school alumni who pursue careers in public interest, teachers in schools serving low-income families, health care providers working in shortage areas, and nonprofit or government employees.

One potential hitch with some programs, cautions student loan expert Heather Jarvis, is that only borrowers with direct loans qualify, which means you may first need to consolidate. So make sure to read the fine print.

paying off student loans early

3. See If You Qualify For An Income-Driven Repayment Plan

The government provides income-driven repayment plans with names like Revised Pay As You Earn Plan (or REPAYE), allowing qualifying borrowers to cap monthly payments at a set percentage (generally 10 percent) of discretionary income. Depending on the plan and whether you borrowed for undergraduate or graduate studies, any remaining debt will be forgiven after 20 or 25 years.

Again, it’s important to do some research to ensure you meet all requirements and about whether it’s right for you. While lower payments can help in the short-term, they may also lead to higher interest costs over time.

4. Automate It

Kantrowitz says most lenders offer an interest-rate reduction—typically between 0.25% and .50%—for borrowers who sign up for auto-debit with electronic billing. Sure, it’s only a slight discount, but every bit counts.

Plus, it reduces the likelihood that you’ll be late or forget to make a payment.

5. Mind the Interest

Interest rates can vary wildly among loans, so keep tabs on what you’re paying on each and instruct your servicers in writing to apply any extra payments to your highest-rate loans first.

And don’t forget: Come tax time, you can deduct up to $2,500 of interest paid on your federal and private student loans on your federal income tax return. It’s an above-the-line income exclusion, Kantrowitz says, so you can claim the deduction even if you don’t itemize.

6. Slip In An Extra Payment

If you can manage it, pay your loans twice a month, biweekly—not two full payments, but two halves. That means instead of 12 payments a year, you’re submitting 26 half payments, or 13 full payments. “You’ve just made an extra payment on your student loan without even noticing,” says Kevin Fudge, government relations and community affairs manager at American Student Assistance.

Just make sure your lender applies it to your principal instead of counting it as an early payment.

7. Consider Refinancing.

Don’t qualify for a loan forgiveness program? If you have good credit, you may be able to score a lower interest rate by refinancing or consolidating your loans through lenders like Credible, SoFi and Earnest. Depending on how big a balance you’re trying to pay down, this could potentially save you thousands over the life of the loan.

Wrapping Up

No matter what you try to do with your student loan, the result should always be to pay it off as soon as possible. It will take sacrifice to pay off your student loan, but there are options like these available to help you alleviate some of that repayment pain that comes after graduation. Think about your life and possibilities if you never had a student loan again. Sounds amazing, right?

 


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This post originally appeared on Grow

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Chris Petrie

Chris (Peach) Petrie is a personal finance expert, money coach, speaker and podcaster.

In 2011, Chris and his family were exhausted from living paycheck-to-paycheck and facing a mountain of debt. They started going against the society standards of misbehaving with money and made the decision to take back control of their lives and money. Within seven months they paid off $52,000, started saving like crazy and began building real wealth.

The word spread fast and Chris started showing friends how to create a budget over dinner. Soon after he started showing their friends how to do the same and eventually Chris started teaching personal finance classes around the community. As the need for the classes grew, Chris launched Money Peach in 2015.

Money Peach was created to help everyday people remove the stress and fear of money by showing them how to save more, make more, and keep more of their money.

Chris Peach has been featured in places like Business Insider, The Huffington Post, Elite Daily, and CheddarTV.

When Chris isn’t at “work” he can be found at the Crossfit gym or riding on the fire truck — Chris is also a full-time firefighter in Phoenix, Arizona.

One Comment

  • I have moved to income based repayment in the last year or so and it made the payments SO much more affordable. I’ve been able to get the rest of my finances in order AND make a plan to have my student loans paid off in 5 years. I’ll begin increasing my payments significantly next year when I get my high interest cards and car loans paid. Right now this is the lowest rate I’ve got so it’s coming in at the end of the priority list.

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