According to research conducted by Demos, a nonprofit public policy and research organization, college loan debt can force students and alumni to delay saving for retirement. It can also discourage them from taking risks such as buying a house, getting married, making investments or starting a business. Your student loan debt doesn’t need to be a burden. You might not realize it, but several ways exist to dispatch it quickly.
Increase Loan Payments
One of the fastest ways to pay off your student loans is by increasing the number of times you pay or the size of your payments. For example, if you apply an extra $20 to your loans a week, you would pay approximately $1,040 extra a year. If your paycheck isn’t large enough to increase payments, cut out unnecessary spending, such as fast food or cable, or get a part-time job and use your entire paycheck from it to repay your loan.
Reduce Loan Interest
You can pay off your loans faster if more of each month’s payment goes toward the loan’s balance rather than the interest. Ask your student loan servicer to apply any extra payments beyond the minimum amount due to the balance. Additionally, ask about lower interest rate options. For example, your servicer might offer you a lower rate if you set up automatic withdrawals from your checking account. You might also qualify for a loan consolidation that includes a lower rate.
Ask for Help
Although some students and alumni feel uncomfortable asking for loan repayment assistance, many people around the world recognize the burden college loans put on students and willingly offer financial support. One easy way to get help is through crowdfunding and crowdsourcing sites, such as PigIt, GoFundMe, FundAnything, Zero Bound and SponsorChange.org. With some sites, people either gift money to you as donations or sponsors pay promised amounts to your loan servicer after you successfully fulfill your commitment to a volunteer work project.
Things to Remember
A student loan repayment calculator, such as the StudentLoans.gov Repayment Estimator, FinAid Loan Calculator or CNN Money Student Loan Calculator (links in Resources), can help you determine the best amount to pay monthly to reach your repayment goal. If you expect a tax refund this year, you can claim the student loan interest deduction when you file if you paid interest last year. The deduction can increase your refund amount and the funds available to put toward your remaining loan balance.
- Demos: Testimony on the Effects of Student Loan Debt on Our Economic Wellbeing and the Higher Ed, Lower Debt Act
- MSN Money: 4 Ways to Pay Off Student Loans Faster
- CBS News: 6 Ways to Pay Off Your Student Loans
- Forbes: Crowdfunding: The New Way to Finance Your Personal Life
- Forbes: How I Paid Off $90,000 in Debt in Three Years
- Creatas/Creatas/Getty Images