Congratulations! You’ve graduated from college. Nothing beats the thrill of walking that stage and getting your hard-earned diploma. But if you’re like most graduates, it doesn’t take long – sometimes six months after graduation – for the black cloud of debt repayment to rain on your parade. What seemed like a free ride during your college years now feels like a debt-repayment roller coaster. But with a little knowledge and a few well-chosen strategies, you can learn how to dig out of student loan debt.
Don’t Delay: Repay Today! Some federal and private programs will give you up to an extra six-month extension – a loan forbearance – before you have to begin repaying your loans. Sounds good right? Gives you time to get a car loan, get into an apartment and start earning some money from that great new job you scored. But it’s kind of like a second helping of dessert: Tasty and satisfying in the moment, but you may regret it later. Delaying repayment can cost you a lot of money and will postpone your payoff date when you’re finally free from student debt.
Keeping student debt around and putting off repayment is not a good idea. It’s actually easier and wiser to pay off your student debt while you’re young and not yet burdened by the escalating monthly expenses that come with age and life changes – marriage, having a family, buying a house or a new car (or two), and planning for retirement.
So, if your goal is to pay off student loans faster, tackle it head on. Avoid loan repayment programs, extensions and higher-interest loan consolidations. Why? Because all of these student loan repayment programs are typically geared toward decreasing payment amounts by lengthening the term of the loan. It’s great for the lender, but it will cost you a lot more money and take you much longer to pay off your student loan debt.
So, visualize a future in which you are free from your student loans. Employing some simple money-saving strategies to reduce student debt right now can yield dramatic savings and lead to a better financial future. The best part is that they are only short-term; not for the rest of your life. But they make a huge difference and can save you big bucks.
Start by creating a budget planner so you know precisely what your monthly income and expenses are. Then trim the fat off monthly expenses to free up more money to pay down your college loans, such as getting a less expensive apartment, avoiding unnecessary splurge or luxury purchases, and cutting back on cable upgrades and mobile data plans. Keep that old phone for another year.
Use any cash windfalls or newfound money, such as an inheritance, annual raises and bonuses, or that annual tax refund to pay down your loans. And, yes, you’re hopefully working hard in your chosen career, but if you have other talents, pick up work on the side and use that extra income to pay down your student loan debt.
One of the best and easiest strategies to reduce debt is by making more than your minimum payment each month. Make it even easier by setting up biweekly payments. With biweekly payments, your regular monthly payment is cut in half and you pay that half every two weeks. Doing so equals to 13 payments per year instead of 12. It sounds small, but it’s huge. And if you’re able to, you can put extra money on top of your biweekly payment toward your principal, saving you even more money on interest and the time it will take to pay off your loan.
Do the math for yourself. Use the AutoPayPlus loan savings calculator to play with various loan and payment scheduling scenarios to see how much money you can save and put into your own pocket instead of giving it to the lender. And check out the number of years you can hack off the repayment schedule reach the nirvana of freedom from student loan debt that much faster.
AutoPayPlus can help you pay down debt sooner. Withdrawals from your account every other week fit conveniently with paychecks and your monthly budget, while an extra half payment twice a year toward principal reduces interest over the life of the loan. Please visit our website to learn more.