Private student loans should be avoided at all costs.
Student loans are one of the greatest debts that most people face, other than a mortgage or a car loan. According to Student Loan Hero, as of 2017, student loan debt in the U.S. has exceeded $1.3 trillion, with an average outstanding balance of over $37k. If you went to undergrad or postgrad, chances are you took out student loans.
Or maybe you’re a parent who took out loans on behalf of a child. Or maybe you co-signed student loans for someone else. Whatever the case, student loans are a burden that will stay with you for life (literally, life) with a few exceptions, namely Public Service Loan Forgiveness or permanent disability.
Otherwise, there’s no way around it. Don’t fret though, student loans aren’t impossible to pay off. And you don’t even have to wait 25 years to pay them all off either. It just takes A LOT of dedication and focus.
I graduated college with a whopping $66k of federal student loans, almost twice the national average. I was fortunate to get a job in my field right after graduation, and I got to work paying off my student loans right away.
I made the decision that I didn’t want to be paying these loans for the next couple of decades. So I made a plan, and got to work. Here are my tips for paying off your student loans quickly:
Get familiar with your loan servicer
The servicer of my student loans is Navient (formerly Sallie Mae). I made myself comfortable with them, as well as their processes for paying my loans. It’s important that you find out yours. You can login to the National Student Loan Data System (NSLDS) to get an overview of the total amount you owe, as well as who your servicer is.
When you find out who they are, get familiar with their website, their repayment options, whether they take online payments, how they handle overpayment, etc. This will make the process much smoother when it comes time to start paying.
Make a plan
Don’t just go into paying off your loans blindly. Form a plan, and stick to it. It’s a good idea to set a goal for yourself. That way, you can stay focused and keep your eyes on the prize. Give yourself a realistic date that you hope to have your loans paid off, determine how much of your pay you can afford to put towards your loans, and figure out where you can cut back in order to make it happen.
Then, most importantly, stick with it. Those loans will be gone in no time.
Apply for auto-payment
The benefits of putting your loans on auto pay are twofold: Not only are they automatic so you don’t have to worry about forgetting to make a payment, but also, most servicers offer an interest rate reduction for having the money automatically deducted from your bank account.
As of writing, Navient deducts 0.25% from the interest rate of each loan that you apply autopay to. Not much, but every penny counts.
Pay extra to your loans
This will be key to getting your loans paid off quickly. Assuming you don’t have other debts with higher interest rates, you can apply extra payments to the principal of your loans. It’s useful to use the hybrid debt payoff method (or the snowball method) to pay your loans.
Make more money
This one is pretty straightforward. More money coming in means more money that can be put towards paying off your loans. Whether it’s a side job, a second job, freelancing, or a higher paying job, find a way to get some more money coming in. After all, most successful people believe in having multiple sources of income. It never hurts.