Life doesn’t get easier after you graduate from college, but, you probably know that already. While you may not have regular late night cram sessions, you will have to find a job, a place to live (preferably not Mom and Dad’s) and pay off your student loan. While paying it off will not happen overnight, having a plan will make a difference in your results. Consider one or more of these pay off methods and, of course, take care not to miss a payment and you’ll be free of this debt.
Make Payments Bi-weekly
This is a strategy that is very popular for paying mortgages. Essentially, you pay half of what your monthly payment would be every other week. The smaller half-payments are easier on your budget and you will pay your loan down more quickly. By paying bi-weekly you will make an extra payment to principal every year.
Pay Extra Monthly
If making bi-weekly payments doesn’t appeal to you, perhaps you could add just a bit more to each of your monthly payments. When you are paying extra upfront, not only do you naturally pay off the debt quicker since you are paying additional, but you are preventing more interest from accumulating.
Use Your Tax Refund
If you are making payments on a student loan you should qualify for a student loan tax deduction. Be sure to take advantage of the deduction, you could end up with a tax refund that you can then apply to your student loan. Talk to your tax advisor about this deduction as well as other credits you may qualify to receive. By doing this you can make a big impact on your student loan!
Paying off your student loan is a big priority for many. However, don’t lose sight of the big picture in your eagerness to relieve yourself of this obligation. For example, if you are paying 6% interest on a student loan, 8% interest on a car loan and 12% interest on a credit card, it only makes sense to pay off your other debts first. Then, you will just pay the minimum on your student loans. Be smart with your finances and pay what you can to reduce your overall debt load. Before you know it, you can be student loan free–then you can start working on that mortgage!
How large is your student loan debt compared to the rest of your household loans? Have you found any additional tips to aid you in reducing your debt quickly?