Student loans have become a hot topic issue as many are graduating with debt before they even find a job. Back in 2012, the Federal Reserve Bank of New York reported that the average student loan debt was almost $25,000 with about 10% of borrowers owning around $58,000.
The good news is there are steps you can take to make sure you pay down your student loans faster. With some planning and consistency on your part, you'll be able to reduce the burden while decreasing how much money you'll end up paying in interest.
Before we jump in to exactly what you can do to pay down your loan faster, there's just one caveat. Make sure to read your student loan documents to see if there are any early payment fees, when they kick in and what they are. This is good to know so you'll be able to plan accordingly.
Once you know whether or not you have early payment fees, create a three to five year plan that outlines how much money you will be sending to pay off your loans. Knowing when the loan ends can give you comfort and add a little fuel to your fire.
Make Larger Payments to Reduce the Principle
If you can afford it, try to make larger payments to reduce the principle of your student loan. This will drastically cut how long you'll be paying the loan as well as helping you avoid higher interest charges that can make the loan drag on forever.
Add Payments Each Month
Another popular method is to send in checks twice a month instead of just once. By treating your loan as a bi-weekly bill instead of a monthly bill, you'll make it easier for yourself to pay down the principle.
If you feel like you may have a hard time doing this, try to use the same schedule as your paycheck. For example, you already know you get your paycheck bi-weekly. Set aside money with each check to pay down your student loans and immediately send in the extra payment.
Set Up an Account with Automatic Savings for Paying Down Your Loans
This is another trick you can use if you feel like you'll forget to send in extra payments to pay off your student loan.
You can set up a separate savings account specifically dedicated to student loan repayment. Once you've opened the account set up an automatic savings plan so you don't even have to think about transferring money throughout the month.
Let the money sit there all month so you get some interest, and at the end of the month use that money toward paying down your student loans.
Look into Extra Sources of Income
It can be difficult to pay down a loan faster if you're only relying on one source of income. You can supercharge your loan repayment by finding extra ways to make money.
Maybe you find a part-time job. Maybe you look into starting a side business writing, babysitting, walking dogs, web designing or whatever it is you're good at. This will not only help you pay down your loan faster, you'll also diversify your income for the long haul.