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How to Pay Your Student Loan Faster

A few things you can do to pay off student loans faster.
There’s no doubt that dealing with student loan debt can seem overwhelming.

But before you freak out and start to regret spending all that money on your degree, take a second to breathe and remember this: There are things you can do to help pay it down faster (besides figuring out how to make more money, of course!)

1. Know the entire story

Chances are, when you were in college, those loans didn’t quite seem real yet. You may not have understood all the ins and outs of your individual loan.

So take the time to figure out exactly how much you owe from each lender, what your interest rate is, and when that interest will go up. At that point, you can make a plan if you didn’t have a solid one pre-graduation.

You should also find out if there are any options you haven’t explored. You may be able to temporarily defer your payments, lower payments, consolidate your loans, or go on an income-based payment plan. Work with your lender to come up with a personalized plan that makes your loans manageable and helps you pay them down.

2. Enroll in automatic payments to avoid late fees

While you’re figuring out the best, personalized ways of paying off your student loans, automatic payments can help you get organized. Some lenders, such as Sallie Mae, will even lower your interest rate when you sign up for automatic payment. Lowering your interest rate by 0.25 percent may not seem like a huge amount, but it will add up. Another plus: Having your payments automatically deducted from your checking account eliminates the chance of missing a payment. Once you miss a payment, you’ll start tacking on late fees and damage your credit score … which is the last thing you need.

 3. Create a Upromise account

If your loans are through Sallie Mae, you can enroll in the free program Upromise.

After creating an account and linking it to your loans, you register your debit cards, credit cards, and reward or loyalty cards from grocery stores, retail chains, and dining programs. When you make a qualifying purchase with one of those cards, a percentage will go toward your loans. You can also score a percentage for your loans by shopping online through your specific Upromise shopping link. To make your earnings grow faster, you can share your online shopping link with your friends or family, and ask them to register their cards to earn you more as well.

 4. Consider loan forgiveness if you qualify

Depending on your career field, you may be able to qualify for certain student loan forgiveness programs in which the government will pay a portion of your loans for you. Doctors, nurses, lawyers, and teachers who are willing to work in low-income areas or rural areas in need of these professionals may be eligible.

Also, regardless of your field, you can join one of various volunteer organizations for repayment. These include Peace Corps, AmeriCorps, or Volunteers in Service to America. These programs require you to sign a contract before beginning. Be sure to thoroughly know all of the stipulations of the agreement, including how long you will have to work there and how much of your loans will be taken care of.

How do you deal with your student loan debt? Do you have any creative ideas we missed?

Ray is an investment professional living in Toronto and the publisher of the blog Financial Highway. You can follow him on Twitter @MoneyHighway.

Comments

  1. Does Upromise work while you are paying back your loans or only before you start?

    • It works both ways. I used it to pay off my loans after graduating college. I linked my Upromise account to my loan servicing company. Then every quarter, Upromise would transfer my balance to my student loans.

      I would however inquire with Upromise first that they will do this for your loans. I did this because I didn’t want to sign up for a service I could not use.

  2. When I graduated I took advantage of consolidating my loans. I was able to lock in an interest rate of 3% and because my income was low at the time, they extended the repayment term out to 20 years. Normally, I wouldn’t suggest this, but since the interest is so low, it was worth it to me. I still made a point to aggressively pay down a significant portion quickly and then took my time paying them off for a few years before getting tired of the monthly payment and simply paying them off completely.

    I also take advantage of Upromise. While is has “paid” some of my loan, in all the years I’ve used it, it might have totaled $500. But then again, I wasn’t using it to it’s full advantage.

  3. Before I was out of school, I planned to have my student loans paid off by 30. Due to current economic conditions, even with my education, it has been difficult to get a job that takes full advantage of my skills. I started working at a public university and have decided to stay in this sector for at least 10 years so I may take advantage of the public service loan forgiveness program as well as the income-based repayment option.. While I still have my loans looming over my head, there is no advantage to paying it off early.

  4. I graduated in 2010, and this past April I decided I wanted to rapidly repay my student loans. I had $40k left of the original $50k balance. I budgeted and created a 1 year payoff plan. I am now at $20k left on my loans and am on track to pay them off next Spring. I do this by throwing everything at the loans (over $3k a month). Once they are done, I am ratcheting up my emergency savings, then increase my investment contributions. I will work on paying my house off early after that.

  5. Good article and hits home for my family. I am military and my education is covered. My wife’s was as well with a grant. Well the grant is now gone and she is trying for more. But we only have $2,000 left of debt to pay off on her car and i own mine. We rent seeing we move about every 3 years. We don’t want to ever get into any debt again. But on my income and her part time job we would only make enough to pay for her degree in nursing and really not be able to invest hardly any thing or be able to up our emergency account. We have right now $1500 for emergency’s. We had 6 months but decided to use most of it to pay off our CC that we racked up $2500 on and to pay down most of her car. We did this after reading Daves Ramsey book. But than she had school paid for by a grant and now she does not. So my question do you guys and gals think it is worth it for her to get student loans for her degree? Or should we pay in cash and not really be able to invest for retirement or to really be able to beef our EF account up for the next 3 years or so?? My job is pretty stable for the next 3-4 years. After all of our bills and having $100 for date nights a month we have about $955. Now she is a temp part time at old navy making about $170 a month not sure how long that will last. So we were using the $955 to pay the rest of the car off. Than we wanted to take the $955 plus the $220 car payment and put all that into beefing the EF account up to 6 months or $11-12K. Once that was done than start investing 15% toward our Roth IRA again and saving the rest for big buys or family vacations. Nothing really to sure after that. I’m just not sure which option to take get into student debt or not save. I’m thinking the student debt due to we could pay it off fast once she got her job. Seeing we will still just live on my income when this happens. Thanks for any thoughts or inputs.