Millennials are no stranger to debt. So, it comes as no surprise that student loan debt has reached over $1.5 trillion, the highest in U.S. history. These statistics are overwhelming. And it’s sad that late fees and recovery calls from lenders have become the new normal.
But, what’s even more worrying is that millennials take a long time to pay off their student loans and that’s delaying their life’s major milestones, which they should be achieving in their twenties.
Fortunately, you don’t have to be live with student loan debt for the rest of your life. There are ways you can pay your debt faster. This article will talk about strategies you can apply to get out of this debt in the shortest amount of time.
1. Pay more than the minimum
This is one of the easiest ways to reduce your debt faster. All you have to do is pay more than the minimum each month. A little extra goes a long way in reducing your debt and saving interest money. Set up automatic payments with this extra amount added in. Once that’s done, it is harder for you to change your mind.
Usually, student loans don’t have a prepayment penalty. So, if you can afford it, you can decide to pay them off anytime.
2. Take advantage of interest tax deductions
This is an easy way to pay off your student loan faster. The interest amount you pay towards your student loan is eligible for tax deductions. Use this to your advantage and apply for a tax refund.
3. Consider consolidation and refinancing options
You could be paying a lot more in interest on your student loan than you should. First of all, try to understand the student loan interest rates. Don’t hesitate to negotiate for a lower interest rate.
Figure out if there is a loan with a much lower interest rate available. Explore refinancing or student loan consolidation options. Consider a personal loan or a debt consolidation loan with a lower interest rate to pay off your existing high-interest rate student loan. This step can save you thousands in interest and help you pay off the student loan debt faster.
4. Make more money
It’s simple logic. The more money you make, the more money you have to repay your student loan. Some of the ways you can bring in more money are:
- If you have a full-time job, consider working overtime or earn a promotion to get the extra money
- Sell your clothes online
- Pick up freelancing work
- Offer online services, such as tutoring, writing, designing, etc.
- Start a small business like cookie-making workshops
| About the Guest Author:
Shiv Nanda is a financial analyst who currently lives in Bangalore (refusing to acknowledge the name change) and works with MoneyTap, India’s first app-based credit-line. Shiv is a true finance geek, and his friends love that. They always rely on him for advice on their investment choices, budgeting skills, personal financial matters and when they want to get a loan. He has made it his life’s mission to help and educate people on various financial topics, so email him your questions at firstname.lastname@example.org.