8 Small Changes You Can Make to Help You Better Pay Down Student Loan Debt
If you have student loan debt, do not be ashamed of it. While you may be embarrassed to talk about it, it is important that you know you are not alone. In fact, many students have some form of student loan debt and 2015 four-year graduates are said to have left college with an average of $35,000 in student loan debt.
Instead of worrying and avoiding your student loan debt, there are some small changes that you can make in your life that will allow you to better pay down your student loan debt. Let’s explore some of those small changes now.
1. Make a Plan for Yourself
The first step in the process and the first small change you can make is to sit down and create a plan for yourself. If you do not have a plan in place, you will just be sending money out the door each month and you never really will understand how to better situate yourself.
When you start to think of a plan, use some online resources to help you. You should take a look at a repayment calculator to determine how much you can expect to pay per month or how much interest you can save by paying different amounts.
After you have an idea, look over your student loan paperwork and put your numbers to work for you. If you have any questions about your loan payment or you know you will not be able to afford the current payment, contact your loan provider NOW and talk to them about your payment plan options.
2. Create a Budget
Yes, you have heard this before, but it is important and essential. If you simply pay all of your bills without keeping track of how much money you have, you may spend too much or you may accidentally send out money that did not need to be sent somewhere, which can leave you in a tough spot.
It helps to have a budget to look at and work with. To create one, you need to start with the amount of money you earn monthly and then subject your necessities from it, other bills, and then your luxuries.
If you find that you are short on money, you should cut out extra expenses to provide yourself with some wiggle room. While it may not be ideal for you, you should cut out coffees from Starbucks, cable, etc.
3. Refinance Your Student Loans
Another small change to make is to refinance your student loans. You will have to qualify to do this, but if you do qualify, it will save you thousands of dollars in interest payments over the course of your loan.
Refinancing will allow you to get a better interest rate on your student loans, which will result in lower monthly payments, restructuring of your loan term, and you will pay less interest.
If you do not qualify for refinancing, you may be able to consolidate your student loans. Consolidation is somewhat similar and you will still save money, however, the biggest different is in the interest rate. In refinancing, you will receive a new lower rate, but with consolidation, you receive a weighted rate.
4. Make Interest Payments While in School
If you have the means to, you should make interest payments while you are in school. In fact, doing this will prevent the interest from accumulating and you will pay less over the course of your loan term. The interest payments that you make while in school will not be huge, so you do not have to worry about hundred or two-hundred dollar payments.
5. Pay More Than the Minimum Amount Due
Just as it helps to make payments while you are still in school, it is a good idea for you to send any additional money you have to your student loan lender. If you make more than the monthly minimum payment, you will pay off your loan quicker and you will save thousands of dollars.
In fact, even if you only have $10 to spare each month and you send it to your student loan lender, you can save anywhere from two to three thousand dollars over the term of your loan!
6. Put Large Amounts of Money Toward Your Loan
Often referred to as cash windfalls, whenever you have a substantial amount of money, you should put it towards your student loans. When we say a substantial amount of money, we are referring to gifts, inheritances, lottery winnings, tax returns, etc. Any large sum of money can be put directly toward your student loan and it will be applied directly to the principal balance.
7. Pay Off High Interest Loans First
When it comes down to it, high interest rates will completely knock you out of the park in debt. You want to figure out which student loans have the highest interest rates and pay them off first.
If you focus on paying these high interest loans off first, you will be able to focus on the smaller and lower interest rate loans later and you will NOT be paying a premium for them.
8. Split Your Monthly Payments
If you find that paying $300 at the end of the month for your student loans is just not working for you, there is another option to help make it more affordable. Instead of sending one payment at the end of the month, simply split your payment into two and pay every two weeks.
Of course, continue to send additional money as you have it, but splitting the payment into two will alleviate a bit of financial stress come the end of the month.
If you are trying to find ways to pay down your student loan debt quicker and easier, the above eight options can greatly help you. Remember, the key is to focus on your debt, set realistic goals, and meet those goals. Soon enough your debt will be completely gone.