Now you’ve finished your degree and landed your dream job — what’s next? For many people it may involve paying back student loans. If this is the case for you, don’t let the loan repayment process seem overwhelming — there are many ways to pay off your loans in no time.
Pay More than the Minimum
By far the most common option is to pay more than the minimum payment. This might seem obvious but it’s one of the most effective ways to pay off your student loans faster. For example, if you round up your monthly payment up to the next $50 (for example, if your normal payment is $208 and you round up to $250 each month), you could pay off your loans more than four years early! If you rounded up the next $25, you would pay off your loans an average of two years earlier. Not only would that mean that your loans are paid off faster, but it would also save you hundreds in accrued interest.
Set Up a Repayment Plan
Another option to pay back your student loans is to set up a repayment plan. Depending on what types of loans you may (or may not) have from your undergraduate degree, and other graduate degrees, you may be a good candidate for consolidation. In essence, a consolidation is when all of your individual student loans from any of your studies are lumped together into one larger loan. In most cases, the interest rates are averaged (although some lenders will negotiate and offer you lower rates to consolidate with them, so it’s best to shop around) and you have a longer period of time to pay them back. By consolidating, you not only pay less in interest over the long term, but you almost always significantly reduce your monthly payments. If you are interested in consolidating your federal loans, you can do it with any one of your loan servicers. The best way to find out who your servicer(s) is/are is to log into the National Student Loan Data System and search under your loan history for the current servicer information. It is fairly common that you as a borrower could have two or more servicers, so I always suggest to contact all of them and see who is willing to offer you the best deal on consolidation. Common questions you would want to ask would be:
- How much would your interest rate be if you consolidated with them?
- What repayment options would you have available?
- By setting up an automatic payment, will your interest rate be reduced?
Most lenders offer up to a .24% to .49% interest rate reduction simply by signing off for automatic payments. It’s also very important to let them know right away if you are going to be pursuing the Teacher Loan Forgiveness plan or the Public Service Loan Forgiveness plan, as you must make sure you are enrolled in a qualifying repayment plan.
Pay Off the Interest While You are in School
If you happen to still be pursuing your degree and haven’t started repaying your loans yet, I would suggest that you consider paying off the interest while you are in school. In many cases, the interest accrued would only be around $20 a month or so while you are in school, but that $20 can go a long way in reducing the total amount you have to pay back when you do graduate.