Many of us invest in our futures by going to college. Getting a degree can open up the doors of opportunity to a good-paying job and a future career. The high cost of education forces us to take out loans to pay for our tuition. Even though it only takes a few short years to rack up this debt, it can take decades to pay off. With good planning and a little research, you can pay down your student loan debt quickly. Below we discuss five ways that you can pay down your student loan debt.
There are a variety of programs that can help to reduce student loan debt. The most popular plans include;
If you have multiple student loans, consolidating them into one may help you to pay the balance down quickly as you are only making one payment. This helps to keep you organized as you are making only one payment each month.
Setting up an income-based repayment plan (IBR) or a pay-as-you-earn (PAYE) can help you to better manage your finances as your payments are based upon how much money you make. When you are just starting out in your profession, your payments will be lower as your salary is lower. As your pay rises, so will your monthly payment.
If you have a federal loan, there is a forgiveness option built into these plans. You may be required to submit proof of income every year and your payment will be updated if you are making more money. Once you complete this program, the remaining amount that you owe on your student loan may be forgiven. Any amounts forgiven are considered taxable to you.
You can refinance your student loan to get a lower interest rate. While this may help to reduce your monthly payment, if you continue to make the same payments as you have been – you can pay off your loan quicker. When you pay a higher monthly payment than what you are required to pay, that difference goes toward reducing your loan balance. As this drops, what you pay out in interest will fall as well.
Whether or not you are able to take advantage of the programs above, consider picking up a side job to make some extra money to pay down your debt. The larger the payment you are able to make each month, the less interest you will pay over time. This means you can pay your loan off quicker and save yourself some money along the way.
For most of us, student loans are a necessity for higher education. While they can impact our lives financially for years to come, you can find ways to get out from under this debt. With a little planning and attention to paying your loan payments on time, you can pay down your student loan debt quickly.