Getting a good education can be a pricey affair. Whether you are studying locally or abroad, opting for some of the best colleges and universities will cost you. Thankfully, students can take student loans from banks, which can help them fund their education and give them the time to pay back their debts over the years.
Typically, it will take a student about ten years to pay off their student loans. However, in reality, it could even go up to 20 years! On average, a student can have about $22,000 per year on undergraduate post-secondary education. In the same way, if a student is pursuing a degree for four years, they can ring up student loans of about $88,000 in total.
Tips to Pay off Student Loans
There are several repayment plans that you can look into when you are trying to calculate the best way to pay back your student loans. Along with these plans, you can also look into some tips that can help you pay off these student loans faster, and without breaking the bank!
1. Making Larger Payments at a Time
Every lender will give you a minimum amount, which you will need to pay off every month. However, a great tip to save up on paying more interest and even paying back all your loans faster is to try and pay more than the minimum amount which you can pay off.
The way this works to your advantage is a lender will typically apply the monthly repayment amount to your loan amounts interest before its principal. By paying back only the minimum price each month, a lesser amount of your money will go into paying back the principal. But, you will end up paying much more in interest amount throughout the loan.
If you pay more than just the minimum amount, then you will be able to pay back the principal amount faster. In turn, this will help you pay back your loans quicker and also end up saving you a lot of interest to be paid back over time.
Read More: How to Pay off Student Loan Fast?
2. Repaying More than Once Every Month
This can seem quite obvious, but if you are earning enough and have the means to repay your student loans, then you can pay back more than once a month. It might seem disadvantageous to you in the short term, as you might end up with less disposable income in your hands, but in the long run, this will help you pay back the principal amount faster.
Also, you might end up having less interest amount on your loan if you can make more than one repayment in a month.
3. Create Your Workable Budget
The process of paying off your student loans is a long and arduous one. While it might take some people ten years or less to pay back all their student loans, it might also take some people 20 years or more to do the same!
A good strategy during this time is to create a budget and stick to it as closely as possible. You can identify certain necessary expenses and many which are not. You can decide which ones you want to cut off from your lifestyle to make your budget a little more workable.
Another thing you can do is to look into your daily expenditure and calculate where you can cut back and where you cannot. You will be able to discover yourself or take some guidance and find out ways in which you can pay back your student loans faster or payback more significant amounts.
Create a realistic goal and end date in mind when you will be able to pay back your student loans completely. During this period, stick to the budget as closely as you can. Of course, it is possible to have the surprise expenditures every once in a while, but try and not make this into a habit as it can affect your long term plans.
4. Create a Student Loan Fund
When you have money in your hands, the temptation to spend it can be quite strong. Of course, when you also have the burden of paying back your student loans, you cannot afford to do this. An excellent way to keep your repayment in check is to create a student loan fund for yourself.
Read More: What is Student Loan Forgiveness in the USA?
Here, you should automatically deposit a certain amount of money which will go into paying back your student loans at the right time. Whatever you do, do not dip into this fund for anything other than paying back your student loans. This not only reduces temptation but also keeps your repayment progress in check.
5. Research, Explore Options and Take Help
With more and more students getting stuck with repaying their student loans, it is quite common to see other options cropping up, which can make this process easier on them. A good tip that you can use is to look into all kinds of options when it comes to repaying your student loans.
Read More: Are Student Loans Possible to Get for International Students?
- You can look into refinancing your loan (in case you have borrowed from a private lender)
- You can look into Income-Driven Repayment plans (IDR) {if you have recently graduated}
- You can also look into the option of Public Service Loan Forgiveness (if you are a public servant or a member of the Armed Forces)
The reality of the matter is, depending upon the college or university you have studied in, depending upon your current financial status and income and also depending upon your repayment plan, the time taken to pay back your student loans can vary from 6 years to 25 years.
The most important thing to remember is to be consistent with your payments, make a plan and maintain a budget, and stick to it. You can explore several repayment options and choose one which fits into your needs. The faster you can pay back your student loans, the lesser you will eventually have to pay back in terms of interest!
