How to Pay Off Your Student Loans
Student loans. Just the mention of them will send shudders through entire generations of Americans, currently working their hardest to pay off debts before intense interest rates make those financial burdens even more stressful. There are a lot of approaches someone can take to give themselves breathing room—federal student loan debt relief, repayment plans, starting up a side hustle…but even then, the road is long, and it will require focus.
Landmark National Bank knows how to pay off student loans and wants to support you as you seek to improve your financial health by chunking your student loans as quickly as possible. Here’s some of our best tips and advice to expedite the long process of debt elimination, so you can feel confident that you’re taking every angle possible to reach financial enlightenment.
Create Clearly Defined Goals
Paying off student loans can be a daunting task. Most alumni find themselves overwhelmed by the amount of debt they have accumulated during their college years. However, with a little bit of planning and goal setting, it is possible to pay off student loan debt quickly and efficiently.
The key is to set clearly defined goals. Start by making an inventory of all your existing student loan debt and interest rates. Next, prioritize which debts you want to tackle first based on the principal amount and interest rate (typically, you want to prioritize the one with the highest interest rate, but if the principal amount of another is high enough that it will damage you more, crunch the numbers to prioritize the best option).
Once you have established these priorities, make a plan that outlines how much money you will allocate each month towards loan repayment. By breaking down your payments into smaller goals and committing yourself to achieving them, it will be easier for you to stay on track until your entire loan balance is paid off in full.
There are ways for borrowers to pay off their loans faster and ease the burden of repayment. Repayment plans offer a variety of options to assist borrowers as they strive to pull themselves out of debt.
One popular way to speed up repayment is known as graduated repayment. This plan divides the loan into multiple payments over a longer period of time, with each payment increasing gradually as the borrower earns more money in the future.
Borrowers should note that overall interest paid may be higher on graduated repayment plans due to extended payment periods, but it can be worth it if they are able to save money in other areas or receive help from employers in terms of tuition reimbursement. This, however, is only one option, and you should explore more repayment plan possibilities.
Increase Your Income
Perhaps the simplest and most straightforward approach for paying off student loans faster is to increase the amount of money you make. Easier said than done, right? However, there are a few things you can do to try and increase your monthly income.
Ask for a Raise
If you’re the type to have a day job and you know you’ve been a strong worker, then there’s no shame in asking for a raise. The amount of value you’ve poured into the company warrants respect to your time and effort. Plan out how you’ll ask for a bump in your income at your next monthly or quarterly review, and what’s a realistic amount to ask about.
Hint: check online to see what others with your job title are making, and use that as a reference point. A good rule of thumb is not to ask for more than a 4.5-5.0% increase, but use your best judgment.
Pick Up a Side Hustle
Hustle culture has exploded across the country in the last ten years. Do you have a hobby or skill that could pull in some pocket change? Start selling your art, driving for a food delivery app, tutoring students from your local school, or any of the many, many other routes people are taking to bring in extra income.
Refinance Your Student Loans
Refinancing your student loans may be the most effective way to reach student loan debt relief. It’s a financial maneuver that can drastically reduce your monthly payments and help you save money in the long run. By swapping out high-interest loans for lower-cost ones, you can significantly reduce the amount of time it takes to pay off your student loan debt.
If you’re having difficulty managing the cost of your college education loan payments, refinancing or consolidating your student loans might be a great option for you. You could qualify for a lower interest rate or longer repayment term, both of which will make it easier to manage and put an end to debt repayment sooner than planned. Keep in mind that refinancing your student loans may have an impact on your credit score, so make sure to do your research if you’re in the process of buying a home.
Utilize Your Tax Benefits
The American Opportunity Tax Credit is one of many benefits available to borrowers who have qualified educational expenses during the tax year. This credit can reduce your overall tax liability by up to $2,500 per eligible student. This tax credit is a great idea for student loan borrowers who are still in school and want to get a financial head start. Additionally, if you qualify for the Lifetime Learning Credit, this can reduce your overall federal income tax liability by up to $2,000 per eligible student.
Alumni who are paying off their college loans may also qualify for other deductions or credits such as deductions for student loan interest or tuition and fees deduction.
Look Into Forgiveness Programs
Student loan forgiveness is an increasingly popular option for college graduates struggling to pay back their student loans. With the rising cost of tuition, many students are unable to cover the full cost of a college education without taking on debt. In response, the federal government has developed various programs designed to help borrowers manage and ultimately reduce their loan balances.
The most common type of student loan forgiveness program offered by the federal government is called Public Service Loan Forgiveness (PSLF). This program helps individuals who work in public service positions and have made 120 payments on their eligible federal student loans while employed at a qualifying employer. By meeting this criteria, borrowers can receive assistance from PSLF in eliminating their remaining balance due on certain types of student loans after 10 years of repayment.
There are many other types of programs that can provide student loan relief as well. As of March 2023, there is a program put in place by president Biden to forgive up to $10,000 worth of student loan debt for eligible public student loan borrowers, and up to $20,000 for students who received a Pell Grant in college. The legality of this motion is currently being evaluated by the Supreme Court, who should have a decision reached by August 2023. Until then, all public student loan payment requirements are paused.
A Bank That’s In Your Corner
Now that you’ve been equipped with a few methods for how to pay off student loans more quickly, we want to offer you an option to make changes right now, today.
Through Landmark National Bank’s personal loans, you can take some of your scariest student loan debts (the ones with the highest interest rates) and consolidate them into a single, lower-rate payment. This way it’s both easier to track how much you have left to owe, and you reduce how much damage interest rates will do to your bank account over the long haul.
Pull yourself out of the trenches and reach out to our team of trained professionals, who will guide you towards financial clarity and walk you through your options for reclaiming your finances. Student loan debt relief doesn’t have to be a lifelong struggle, and you have all the power in the world to start transformation now. Open an account or apply for a personal loan at Landmark National Bank today!