A student loan is the common buzzword that many students face. These loans help them in studying abroad or in their country, of course depending on their goals. Used for the same purposes, student loans come with separate loan structures. They also come with added features but the most common of them all is complexity.
Most student loans are structured in a way that’s meant to accommodate you. However, they tend to leave out the terms that you understand. And all that you need to skip, and sign is large financial jargons and a lengthy contract.
With a tuition fee of more than $9000, for instance and hefty interest charges, you’ll have a student loan that’s bigger than ever. That’s why these kinds of financial matters need a simple check-up before you sign-up. It’s also important to find out about the available options the lender has in repaying that loan.
Strategies to Repaying Your Student Loans
If you have a student loan, it would be best if you repay it quickly. That’s because the longer it takes to pay down the debt, the more interest gets accumulated and the more you’ll need to pay in total.
As a newly employed professional or student, it would be difficult for you to pay huge sums of money. That’s why we decided to share these strategies to help you get rid of that school loan.
- Make Use of Tax Deductions
It is in your best interest not to overlook tax deductions for student loan interest. If you qualify, the IRS will allow you to deduct up to $2500 in student loan interest per year.
This deduction will help in reducing your taxable income which will in-turn reduce what you must pay in tax. You must, however, note that the $2500 cap is per return and not per person. Also, remember that you don’t have to itemize to get the deduction as the student loan interest is an “above the line” tax deduction.
You must avoid confusing a deduction with a tax credit. That’s because a deduction reduces your taxable income while a tax credit reduces the amount of taxes you pay on a dollar-per-dollar basis.
- Consider Using Debt Management Software
Debt management software can help you manage your student loan payments. It will also help you get a better understanding of how much interest you’ll pay based on different payoff timelines. The debt management software can help you put your high loan balances behind you.
Keep in mind that the best debt management software is one that you’ll use constantly. The software you choose should also help you aggregate all your debts. That way, you can create strategies within the software on how much you’ll pay per month to reduce the debt.
You can, for instance, organize the debts based on a preferred payoff strategy. If you prefer the debt snowball strategy, you will prioritize the smallest debts before taking on the bigger loan. If you go for the debt avalanche strategy, you’ll have to treat your high interest loan with urgency.
- Take up a Freelance Job
This strategy is for you if you’re still studying but want to begin paying off the debt. Consider taking up a freelance or part-time job if you have spare time after college lectures.
Having fun throughout your college life with countless parties to attend is very tempting. But you shouldn’t forget your student loan either. We’re not saying that you exert yourself and end-up with no social life. Take up a job only if your mind can permit it and if your school schedule allows it.
Identify where your interest is and look for opportunities in your city. You can look for projects that are like your hobbies such as photography and writing. You can also stick to basic work-from-home options.
- Save as Much as you Can
It goes without saying that you must save as much as you can to pay off your student loan. Remember that one of the easiest ways to fall in debt is not saving and living beyond your means. You must keep an eye on your standard of living to avoid overspending.
You can, for instance, share a vehicle with a friend while traveling to and from work or school. You may also want to carry lunch instead of eating out. You can also do a comparison of options on what to buy and go for cheaper items without compromising on quality.
Apart from the few examples mentioned above, there are many other ways of saving on your expenses and still living a comfortable life while paying the loan.
- Find a Job with Repayment Assistance
The number of employers that offer repayment assistance has been growing over the years. Much like benefits such as stock options and health insurance. A lot of organizations are embracing student loan repayment assistance. The reason for this is that it helps to build an employee’s loyalty to the business.
It’s also a way of attracting new talent into the organization. In any case, not all employers provide repayment assistance.
Note that most repayment assistance plans make payments directly to the servicer, thus reducing your student loan balance. Expect these kinds of programs to have monthly, annual, or lifetime caps.
- Stay in Contact with the Lenders
It’s important that you stay in touch with the lenders. It will ensure that they always have your updated contact information. If your email address, for instance, changes and your lenders don’t get informed, it will cause you to miss out on the important messages about your loans.
This can result in you missing a payment hence costing you extra money. It can also negatively affect your credit rating.
It’s important that you don’t avoid your lenders after defaulting on your repayment. Contact the lender as soon as the problem arises. Don’t lose hope if it feels like you’re drowning in debt. There are many accredited organizations that can help you address your financial obligations.
- Refinance for a Lower Interest Rate
If you’re looking for ways to pay off your student loan faster, consider international student loans with a lender in the United States of America. Refinancing your school loan could have you scoring a lower interest rate.
Less of your money will be going to interest. That way, you’ll be able to afford extra payments on your refinanced loan. Some refinancing lenders in the U.S don’t charge a prepayment penalty. So, chances are that you won’t have to worry about racking up any prepayment fees.
Some lenders also provide additional rate discounts, but only if you make the payments on time or sign-up for automatic payments.
Taking these steps will reduce your interest rate as much as possible. It will also make your school loan more affordable as you work to pay it off faster.
Final Take Away
There is an increasing number of college students applying for financial assistance every year. These loans are usually in the form of federal or private student loans.
Notably, there are always some risks associated with debt. In-spite of that, trying to repay your student loan as fast as possible will help to significantly ease your financial burden.