For students who desire to continue higher education but cannot financially do so on their own, a student loan is certainly a blessing. Many people eventually sell up family belongings, including gold, in order to fund their higher education. With the aid of an education loan or student loan, you may preserve these priceless possessions while continuing your education.
A number of student loans from the nation’s top lenders are available to pay for different courses. Whatever form of student loan you decide to take out, you must have a reliable repayment schedule in place.
You will be able to make your monthly payments in this manner without defaulting on loans. You have come to the right place if you need assistance managing your student loans. You will find the best way to pay off student loans in this blog.
Table of contents
Here are some of the best ways to pay off your student loans.
Refinance
You can pay off student loans more quickly without making extra payments through refinancing student loans. Multiple student loans are replaced with a single private loan with the help of refinancing, ideally at a lower rate of interest. Refinancing can be the best way to pay off student loans.
In order to make the repayment faster, you can select a new loan term which is less than what is left on your current loans.
Choosing a shorter term may increase your monthly payment, but it will allow you to pay the loan faster and save money on interest. You can opt for refinancing in case you have a credit score that is in at least the high 600s, a debt-to-income ratio below 50%, and a solid income.
Also Read: ADVANTAGE OF FIXED RATE LOAN: WHY CHOOSE A FIXED RATE LOAN OVER A VARIABLE ONE?
Pay Extra Toward The Principal
Paying off student loans early or paying more than the minimum doesn’t lead to any penalty, however, there is a caveat with the prepayment. Your extra payment may be used by the student loan servicers, which collect your bill, to advance your due date.
You can’t pay off student loans more quickly by moving up their due dates. That’s because any late fines and accumulated interest will be paid out of your extra payment before it reaches your principal. Instead, tell your servicer to maintain the next month’s due date unchanged and to apply any excess payments to your principal debt by giving them your instructions online, over the phone, or via letter.
You can pay more at any time during the month, or you can pay off your student loans in full on the due date. You can save a ton of money by using either tactic. This can surely be the best way to pay off student loans.
Also Read: GET AN EDUCATION LOAN FOR PILOT TRAINING PROGRAMS: MAKE YOUR DREAM OF FLYING HIGH COME TRUE!
Enroll in Autopay
Another strategy to reduce the interest rate on your student loan so that more of your money goes toward the main balance is to enrol in autopay.
If you allow federal student loan servicers to automatically take payments from your bank account, they will reduce the interest rate by one-quarter point. This can turn out to be the best way to pay off student loans.
A lot of private lenders also provide auto-pay deductions. To sign up or learn if there is a discount for autopay, get in touch with your servicer.
Also Read: EDUCATION LOAN FOR MTECH ABROAD: A GUIDE
Use ‘Found’ Money
Try to set aside at least a percentage of any financial windfalls, such as a raise, student loan refinancing bonus, or another financial windfall, for your debts.
Another place to look is at your employer. Some businesses offer employees student loan repayment as a perk. Ask whether your firm has a program for repaying student loans by employees and how to sign up.
To enhance your income and speed up student loan repayment, start a side business. Rent out your extra room, parking space, or car, or use your skills as a freelancer or consultant on the side. You may even sell stuff like apparel, old gift cards, or photos. Doing so can turn out to be the best way to pay off student loans.
Also Read LIST OF THE CHEAPEST FOREX CARDS FOR STUDENTS: SEND MONEY INTERNATIONALLY WITH LOW TRANSFER FEE!
Make Biweekly Payments
Instead of making a single full monthly payment, you can make bi-weekly payments by paying half of your student loan debt every two weeks.
You will wind up paying an additional amount each year, shortening your payback period and saving money on interest charges. To see how much time and money you can save, use a biweekly student loan payment calculator. Biweekly payments can definitely be the fastest and best way to pay off student loans.
Also Read: LAXMI VILAS BANK EDUCATION LOAN TO STUDY ABROAD: INTEREST RATE, BENEFITS, APPLICATION PROCESS
Stick to the Standard Repayment Plan
Unless you decide otherwise, the government automatically sets up federal student loans on a 10-year payback schedule. Staying on the normal repayment plan is the quickest approach to pay off federal debts if you are unable to make additional instalments. This can be the best way to pay off student loans for you.
Income-driven repayment options are available for federal loans, which can lower your monthly payment but increase the time it takes to pay them off to 20 or 25 years. Depending on your balance, consolidating student loans might extend repayment time to a maximum of 30 years.
Also Read: EDUCATION LOAN FOR PG DIPLOMA IN CANADA: ELIGIBILITY, PROCESS, TYPES OF LOAN AVAILABLE
Pay Off Capitalised Interest
Interest will accrue while you’re in school, during your grace period, and during periods of delay and forbearance, unless your loans are supported by the federal government. When repayment starts, that interest starts to compound, which causes your debt to increase and your interest payments to increase.
To prevent capitalisation, think about paying the interest as it accrues on a monthly basis. Alternatively, pay your interest in full before the grace period or delay expires. Although it won’t speed up the payoff process directly, doing so will result in a reduced sum to pay off. This also can be the best way to pay off student loans.
FAQs
Ans. Standard repayment is the best option for repayment. You pay back student loans using the usual 10-year repayment schedule in equal monthly instalments. You will pay less interest and return your loans more quickly if you can afford the basic plan than you would with alternative government repayment programs.
Ans. Here are some of the fastest ways to pay off student loans:
Make Biweekly Payments
Pay Extra Toward The Principal
Pay Off Capitalised Interest
Stick to the Standard Repayment Plan
Refinance
Enroll in Autopay
Use ‘Found’ Money
Ans. Depending on your financial condition and other debts, paying off your student loans all at once may be a wise decision. In some circumstances, it might be more prudent to preserve your student loan debt and use a windfall to achieve other financial goals.
Hope this blog gave you all the necessary information regarding some of the best ways to pay off a student loan. For more such information visit us at FlyFinance.
