The average US college student has $30.000 student loan debt burden. If you are one of those who are struggling on how to pay off student loans and become debt-free, then here is the good news for you. In order to pay off your student loans earlier than expected, you should change your repayment strategy. On the other hand, to pay off student loans more before than required has a range of benefits for you. To pay off a student loan early, there are some tools and tricks that the vast majority of students are not aware of them. With the help of this article, you can learn several strategies and tips that will make you feel free and pay off outstanding student loan debts.
How to pay off student loans early?
Let us make some daydreaming. What would you do if you win a million dollar on Jackpot prize? If you think about pay off your student loan debt, then you have a problem with your loans. And you have to do something about it. Take a look at the following alternatives to become debt free and pay off the student loans.
1.Refinance with a lower rate
One of the most challenging parts of student loan to deal with is interest rates. Generally speaking, interest rates are the cost of borrowing for your budget. That is why any strategy or tool that will make lower your interest rates could be taken first and forefront. One of these methods is refinancing of loans that could make your interest rate lower.
Another similar alternative option is loan consolidation. Through the Loan Consolidation, you can combine several federal loans under a unit loan. This program provides a variety of benefits especially for the borrower who have low income and find it difficult to make payments. The first notable feature of Federal Student Loan Consolidation is that the program allows you to make smaller monthly payments on combined several loans. You don’t waste your time struggling with different types of payment bill, various lender, etc. And the interest rate is calculated on the weight-average method, so your monthly payment is considerably decreased. You can take the benefit of loan consolidation in the following ways:
What makes the Loan Consolidation programs so different is they have a wide-ranging list of alternatives for repayment. With such flexible repayment options, the borrower is allowed to pick up the most suitable one for his or her budget. Especially when you find yourself in a situation of hardly making a payment on your debts, then this kind of repayment alternative could be the matter of death and life. For instance, let us assume that your income is not consistent and certain months you have zero income. In this case, you will not be required to make the payment on your student loan debt, if you have already consolidated your loan or chosen a specific type of repayment plan.
Besides all of these, another opportunity that loan consolidation provides is that you might be eligible for student loan forgiveness programs.
3. Take your chance for loan forgiveness programs
To get out of the student loan debts and to become a debt-free, one of the most effective and powerful ways is finding an available student loan forgiveness program. Besides that, there are various loan discharge and debt relief programs that significantly help you to reduce your debt burden. Even though there are a lot of alternatives through various types of student loan forgiveness programs, let us take a little bit closer look at each of them one-by-one.
PSLF (Public Service Loan Forgiveness Program ) by taking into consideration of some privileges such as eligibility requirement, flexible terms, and conditions and amount of loan cancellation, etc., this type may rank as the first on the list. PSLF is available for the people who have been working in the public sector, government institutions, volunteer and not-for-profit organizations.
Another favorite type of forgiveness is Federal TEACH Grants. This program provides you to get a worth grant amount up to $4000. However, to be eligible, you will be required to agree to sign TEACH grant obligation. This statement obliges you to teach at low-income students at specific schools determined by the US Department of Education.
One of the most popular loan relief programs is the Nurse Corps Loan Repayment which is launched to motivate and incentivize the nurse to work at low-reputation medical institutions and hospitals. If you work as a nurse for at least 20 years, then you qualify to receive relief for your debt more than 60%. If we take into account that studying nurse and other medical fields take so more prolonged than other specialties, then 60% means a considerable amount of money.
The Final loan cancellation type is Military Loan Forgiveness Program which is designed to assist people who work in the army financially. By depending on the field of army, and your working experience, the program could provide loan forgiveness up to $65000.
There is another option to reduce payment on your student loan debt that is called AutoPay repayment method. For those who are on Auto Pay mode, the lender takes the monthly payments from the borrower’s bank account automatically. The positive side of this mode is that it reduces interest rate up to 0.25%. If we take into account that the overall loan period takes at least 10, and more years, this accumulates a considerable amount of money that you can save.
Pay the loans with the highest interest rates
If you have several student loans, it would be better to start with making payments on the one which has higher interest rates than others. In the meantime, you can look for other options to refinance or consolidate your other student loans.
Seek out for tax deductions and credits.
If you keep making regular payments on your student loan debts, then you are more likely to qualify for the student loan interest deduction on your federal taxes. If you are eligible, you have a chance to cut up to $2,500 on your federal taxes each year for the interest you pay on your debts. On the other hand, tax credits may help you to save more than a tax deduction. If you pay off the student loan and you are in grad school, then most probably you are eligible for tax credits.
We can not deny that student loan repayment system has been designed in a very complicated system. When you borrow money through a student loan, you undergo long-term financial burden on your budget. However, it does not mean that you could not find alternative ways to pay off student loans and become debt free. Despite it may take a long time and require patience to find out a convenient option for you to pay off a student loan early, still there is a high probability of finding a useful resource. If you have any question related to student loans, you can contact us. It would be a great pleasure for our team at Student Loans Resolved to help you to become debt free.