Are student loans dragging down your credit score? The longer you wait to pay back your loans, the longer you have to accumulate interest and have a frustrating burden hanging over you. Here are five ways to pay off your student loans fast.
1. Make more than the minimum payment
The bare minimum only keeps your account in good standing. The small amount contributes little to the principle balance owed. You should add at least $100 to your monthly payment if you aim to pay off your loan before its term. Sometimes it is better to divide payments in half and make remittance every two weeks. Setting up automatic installments that are deducted directly from your checking account is also a good way to ensure that you are consistent with giving lenders extra.
2. Consolidate and refinance
Consolidating and refinancing is one of the best ways to pay off your loan quickly. Grouping all of your advances together lets you make a single payment instead of several, which further gives you the opportunity to contribute more towards your principle balance. Refinancing your loan also comes with the advantage of a lower interest rate. A decrease in interest can mean the difference between being debt-free in five years or going the full ten years with your loan.
3. Take advantage of loan forgiveness
Several civil service jobs offer loan forgiveness to employees who have labored for five consecutive years as full-time workers. For example, if you earned a master’s of science in a nursing program, you have the option of debt exoneration after working in the field for five years. Medical professionals and nurses must apply for forgiveness of Perkins loans through the school that dispersed the advance. All other exonerations must be sought directly through the lender.
4. Run away from repayment programs
Repayment programs are designed to help borrowers who are in financial constraints that do not allow them to make standard payments. For such consumers, the idea of having the loan stretched out over the course of thirty years is better than defaulting on the agreement altogether. Repayment programs are not the solution for individuals looking to pay off their debt quickly. You will add as many as twenty years to the term, not to mention bundles of interest, by accepting a repayment plan.
5. Use tax deductions and credits to your benefit
You can deduct a maximum of $2,500 from taxes owed for interest paid on student loans. The incentive does not require itemization, which serves as an added benefit to those graduates who use the simple form when filing income taxes. Students with student loans who are also paying tuition can take advantage of government credits. You can use money earned from credits and deductions to your advantage by putting it towards the principle balance of your student loan.
Bills have a way of clouding your vision and snuffing out your financial dreams. Instead of wallowing in debt, take action by implementing the above steps and get your student loans taken care of once and for all.