Are you interested in paying off your student loans faster? If so, you’re not alone. In fact, many people have student loans that they want to pay off as quickly as possible.
But what can you do to make this happen? The good news is that there are a few easy steps you can take.
Pay more than the minimum monthly amount – This is one of the most important things you can do. It will help reduce the amount of interest you pay on your loans, which will go towards paying down the principal balance instead. This means that your loan becomes smaller over time and it will be easier to pay it off quickly!
Make sure all payments are on time – This one is pretty obvious but it’s important because missing even one payment can increase your interest rate by as much as six percentage points! So make sure that when you have money coming out of your bank account every month for a certain amount – then only spend that amount! Otherwise, if there’s extra money left over each month or week – put it straight into an emergency fund or savings account instead (this could be an idea for another blog post though).
Fast Way To Pay Off Student Loans
The best way to pay off student loans is to pay more than the minimum each month. The more you pay toward your loans, the less interest you’ll owe — and the quicker the balance will disappear.
Use a student loan payoff calculator to see how fast you could get rid of your loans and how much money in interest you’d save. Here are seven strategies to help you pay off student loans even faster.
1. Make extra payments the right way
There’s never any penalty for paying student loans early or paying more than the minimum. But there is a caveat with prepayment: Student loan servicers, which collect your bill, may apply the extra amount to the next month’s payment.
That advances your due date, but it won’t help you pay off student loans faster. Instead, instruct your servicer — either online, by phone or by mail — to apply overpayments to your current balance, and to keep next month’s due date as planned.
You can make an additional payment at any point in the month, or you can make a lump-sum student loan payment on the due date. Either can save you a lot of money.
For example, let’s say you owe $10,000 with a 4.5% interest rate. By paying an extra $100 every month, you’d be debt-free more than five years ahead of schedule, if you were on a 10-year repayment plan.
2. Refinance if you have good credit and a steady job
Refinancing student loans can help you pay off student loans fast without making extra payments.
Refinancing replaces multiple student loans with a single private loan, ideally at a lower interest rate. To speed up repayment, choose a new loan term that’s less than what’s left on your current loans.
Opting for a shorter term may increase your monthly payment. But it will help you pay the debt faster and save money on interest.
For example, refinancing $50,000 from 8.5% interest to 4.5% could let you pay off your student loan debt nearly two years faster. It would also save you about $13,000 in interest, even with payments that stay about the same.
You’re a good candidate for refinancing if you have a credit score in at least the high 600s, a solid income and a debt-to-income ratio below 50%. You shouldn’t refinance federal student loans if you want or need programs like income-driven repayment and Public Service Loan Forgiveness.
3. Enroll in autopay
If you don’t want to refinance your loans, signing up for autopay is another potential way to lower your student loan’s interest rate.
Federal student loan servicers offer a quarter-point interest rate discount if you let them automatically deduct payments from your bank account. Many private lenders offer an auto-pay deduction as well.
The savings from this discount will likely be minimal — dropping a $10,000 loan’s interest rate from 4.5% to 4.25% would save you about $144 overall, based on a 10-year repayment plan. But that’s still extra money to help pay off student loans fast.
Contact your servicer to enroll or find out if an autopay discount is available.
4. Make biweekly payments
This simple strategy is a way to trick yourself into paying extra on debt: Pay half of your payment every two weeks instead of making one full payment monthly.
You’ll end up making an extra payment each year, shaving time off your repayment schedule and dollars off your interest costs. Use a biweekly student loan payment calculator to see how much time and money you can save.
donors that pay off student loans
About 45 million people carry student loan debt in the United States — to the tune of more than $1.7 trillion. The average student debtor graduates with $39,400 in student loans.
With that in mind, it’s no surprise that many people are trying to figure out how to get rid of this debt. Interestingly, there are donors that pay off student loans, as well as charities that help with student loans. Here’s what you need to know about getting donations to help with student loans.
Charities That Help Pay Off Student Loans
If you’re looking for charities that help with student loans, there are a few that can be good choices. Some might have requirements, such as volunteer work, in order to qualify.
Here are some of the charities that help with student loans.
Rolling Jubilee is a project of the Debt Collective, which focuses on debt abolition. It’s not just student loan debt, but all types of debt. As part of the effort, Rolling Jubilee buys the debt, for pennies on the dollar. Then, instead of making the debtor make payments, they just forgive the debt.
Shared Harvest Fund
Shared Harvest is an organization that offers student loan funds in exchange for volunteer work. You’re paired with charities and other nonprofits and as you volunteer, Shared Harvest puts money toward your student loan repayment. As a result of COVID-19 pandemic, there has been a shift toward those that can help in hard-hit communities. This can be an opportunity for student loan forgiveness for nurses.
Organizations That Offer Student Loan Repayment Assistance
Some of the organizations that provide loan repayment assistance include those that offer government-backed relief.
Rather than being a charity, AmeriCorps offers partial loan repayment after you complete 12 months of service. You need to work full-time and, on top of offering partial loan repayment, your time in AmeriCorps can be used toward qualifying for Public Service Loan Forgiveness (PSLF).
National Health Service Corps
There are various loan repayment assistance programs through the National Health Service Corps. Your level of loan repayment depends on your healthcare specialty and whether you work full-time or part-time. You also have to work in an area that is considered underserved. This can be one way to get student loan forgiveness for doctors.
Teach For America
For teachers willing to work in a low-income and needed area for at least five years, it’s possible to get up to $17,500 in loan repayment assistance. This is one option for student loan forgiveness for teachers.
Peace Corps is another government-backed program aimed at volunteer work around the world. After you complete your service, you can receive partial loan repayment assistance. On top of that, this is another opportunity to work in a way that qualifies you for PSLF.
Donors That Help Repay Student Loans
For borrowers who aren’t eligible for loan forgiveness and repayment assistance through the above charities and government organizations, here are a few other channels to consider:
Another option is to get individual donations from people to help you pay off your student loans. Crowdfunding is a way to get small amounts of money from a lot of people to help pay down your student debt. Some of the popular crowdfunding sites include:
Before you use crowdfunding, realize that it requires a lot of work to promote your campaign and raise money. Additionally, many crowdfunding websites take a cut, so you won’t necessarily get the full amount.
Celebrities & Private Individuals
In addition to government programs and charities that help with student loans, celebrities sometimes help pay off debt.
For example, Ellen Degeneres has a program where fans can apply for debt pay off. Robert H. Smith paid off the debt of Morehouse College graduates in 2019 and has an ongoing scholarship relationship with the institution. Taylor Swift and Nicki Minaj have also provided help for struggling students and graduates.