Fastest Ways to Pay Off Student Loan Debt
During this day and age, college is characterized by financial aid and student loans. Many people graduate with a sizable debt owed to the government or some private lender (usually a combination of the two). There are solutions such as loan consolidation or refinancing. These options may lower overall interest rates, but there is still the chance of getting crushed by interest that builds up on a large principal balance over time. There are several pieces of advice that can help alleviate the threat of interest, and they all have to do with tackling the main culprit: the principal balance of a loan.
One of the biggest aspects of making student loan payments is interest accrual, so one of the most effective ways in paying off these loans is to cut away this interest. The best way to cut down on interest is to make larger payments each month; in other words, borrowers need to avoid making only minimum payments. By eliminating larger portions of the overall debt, there is going to be less of the total loan left for the next payment. The interest payment on a principal balance is going to be lower as a result. This pays the loan off faster, and it lowers the total spent on the loan. If a borrower happens to have an extra $100 at the end of the month, they should put it towards their loan principal balance.
This next method is related to the previous method of increasing payments, but it requires a bit more foresight and focus on overall payment period. Instead of relying on a 10 year or 15 year plan, borrowers may want to condense their payments into a three or five year plan. This requires making much larger monthly payments just like the previous method, but it requires a budget plan and consideration of annual salary. If a borrower earns a sizeable salary each month, they are in a much better position to budget some of that salary towards student loan payments. With these considerations in mind, a borrower can reduce their payment term by years or even a decade.
Before leaving college, borrowers may want to consider starting principal and interest payments early. Throughout many people's undergraduate careers, interest rates build up on unpaid principal balances. This interest builds for up to four years which makes payments right after graduation much more difficult. Undergraduate students can cut down the principal balance and overall interest by simply making payments early. Of course, this is easier said than done; the broke college student did not earn their stereotype for no reason. College undergrads may need to pick up a part time job in order to afford this early payment method. It may require plenty of time commitment, but the debt elimination is a considerable benefit from the hard work.
These are only a few ways to eliminate the debt that builds up during anyone's college tenure. One of the main takeaways from these pieces of advice is hard work and planning. Being stuck in a hole requires either a lot of climbing or digging to get out. Graduating college with a ton of debt is the equivalent of being stuck in a hole, so naturally, the digging or climbing refers to careful budgeting and hard work. There is going to be much less work climbing out of a shallower hole, but if one waits too long, the task only becomes harder and harder.