How To Pay Off Student Loans In Bitlife

Last Updated on August 30, 2023

A lot of people are looking to pay off their student loans as quickly as possible. But not everyone knows how to do it—and there’s more than one way to get the job done.

Here are some tips that can help you pay off your student loans faster:

  1. Make a budget and stick to it
  2. Save up money upfront when you get a raise or bonus
  3. Live like a college student again, but on less money!

How To Pay Off Student Loans In Bitlife

7 TIPS FOR HOW TO PAY OFF STUDENT LOANS

female student on laptop on campus

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Creating a plan to repay your student loans can help you get out of debt faster and borrow less in the long run.Higher education can be costly. Credit.com states the average student has roughly $31,000 in debt after graduation. It is important to determine how much student debt you have prior to graduation. It can help you better understand the type of repayment plan you need to have. Below are 7 ways to start paying off your student loans, even while you are still in college.

1. UNDERSTAND HOW YOUR STUDENT LOAN DEBT WILL AFFECT YOUR FUTURE

If you haven’t started repaying your college loans yet, it can be hard to imagine how they could impact your income and lifestyle. Are you going to be able to make enough money to cover your loan payments and support everyday living expenses?

You’ll get some ideas about repaying your student loans by looking at a student loan repayment calculator like 1st Financial Bank USA’s Student Loan Repayment and Affordability Calculator. Student loan repayment calculators show your estimated loan payments based on your interest rate and term length of the loan. These calculators help you determine how much of your future salary will go toward your loan payments, and can give you an excellent reality check, preventing you from over-borrowing in college.

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2. START MAKING STUDENT LOAN PAYMENTS WHILE YOU’RE STILL IN SCHOOL

It may sound impossible to make loan payments while you’re still a college student and not earning a significant income. However, any amount you can put toward your student loans will reduce your debt and help you form responsible saving habits in the long run. If you don’t have other necessary expenses to pay for, use money you earn from a part-time job or other odd jobs to start paying off your debt.

Federal unsubsidized loans and private loans accrue interest during college that will be added to your total loan balance. If you start paying down this interest as soon as possible, it can result in lower debt after graduation.

3. RETURN YOUR FINANCIAL AID REFUNDS

After your school receives your college loan disbursement from your lender, it will deduct tuition, fees, and other costs from your total bill. Then the remainder of the loan will be refunded to you. Your return can be used for expenses not billed by the university, such as off-campus rent, books, and supplies, if needed.

If you have money left over after covering these expenses, it can be tempting to spend it. Once you’ve spent your leftover money from the loan, you’ll have to pay it back with interest. Instead, return the refund to the lender within their specified time period (usually from 30-120 days) so you stay on track.

4. PAY DOWN HIGH AND VARIABLE INTEREST LOANS FIRST

It can be easier and faster to pay off student loans if you make more than the minimum payment each month. If you have multiple college loans with different interest rates, some financial experts suggest paying more than the minimum payment on your highest and variable interest rate loans and making the minimum payment on loans with lower, fixed interest. This strategy can help eliminate or reduce your most expensive college loans faster and protect you from variable interest rates that can raise your monthly payments.

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5. WORK AND SAVE DURING THE “GRACE PERIOD”

Federal college loans don’t require students to start making payments until six months after graduation. This time frame is known as a “grace period.” Save as much money as you can during your grace period to put toward your loans, especially if you land a job right out of college.

6. SET UP AUTO-PAY

Having your student loan payments automatically deducted from your bank account will prevent you from missing payments and incurring late fees. Even better, some loan servicers offer an interest rate deduction if you sign up for auto-pay. Federal student loans, for example, offer a 0.25% interest rate deduction.

7. CHOOSE THE RIGHT STUDENT LOAN REPAYMENT PLAN

Look at all the repayment plans available and choose one that works best for your financial goals. Federal college loans offer several repayment options:

  • The standard repayment plan sets up the same payment amount every month (with a minimum payment of $50). Unless you have decided to have a different plan, this standard plan is the one you will receive. Students on this plan must pay off their loan in 10 years.
  • The graduated plan increases your payments every two years. Students must repay this loan within 10 years.
  • The extended plan sets up either a fixed or graduated payment over a period of 25 years.
  • The five income-driven plans allow payments to fluctuate according to your annual income, family size, and other factors. For example, the Revised Pay-as-You-Earn plan reduces monthly loan payments to 10 percent of discretionary income and forgives the remaining loan balance after 20-25 years of consistent payments.

You can switch to a different payment plan anytime with no penalty. Just keep in mind that a plan with a lower monthly payment will take longer to pay off, and you’ll pay more in interest.

Repaying college loans can be a complicated process. It’s important to understand that paying for college takes consistency and financial stability, and finding the right repayment plan is going to make a big difference. While you’re still in school, try to save as much as possible or start repaying your loans so you have less to pay off later.

how to pay off liabilities in bitlife

10 Steps to Be Debt-Free in Less Than a Year

1. Bump up your debt repayment percentage

Putting at least 15 percent of your paycheck — or income from Social Security or pensions — toward credit card debt and loans will help you pay down those obligations much more quickly because most credit card companies only ask you to pay about 2 percent of the outstanding balance each month. Making small, minimum payments means that your debt balances are collecting interest as each month or each year goes by. Paying off large chunks of your debt within a few months could save you a significant amount of money on interest payments alone.

2. Use savings to pay down larger debts

Don’t be afraid to use a portion of your savings to pay down high-interest rate debts. Using cash reserves for debt repayment is a smart decision because you will stop accruing interest on those large balances. Although it may feel comforting to have some extra cash sitting in your bank account, the truth is that those funds aren’t really working for you — not with today’s record low interest rates. Don’t deplete your savings entirely. If you’re sitting on a pile of cash, do use some of those funds to eliminate your bills.

3. Negotiate for a lower interest rate

Call your creditors to negotiate a lower interest rate. You’ll be surprised how many creditors will be willing to reduce your interest rate based on your payment history and account standing.

If you have maintained a good relationship for a few years, you may be in a much better position to qualify for a lower interest rate. This can help you save some money on interest payments as you pay down that debt over the course of the year.

4. Use your tax refund check to pay down debt

While it’s tempting to splurge on a high-ticket item or go on vacation with that tax refund check, a smarter money move would be to pay down some, or all, of your debt. Consider the value of reducing your monthly payments with a single lump sum debt payoff strategy. You’ll enjoy the benefits of a lighter debt load over the entire year and for years to come, instead of enjoying the short-term satisfaction of a purchase.

5. Sell items for cash

Put together a list of items that you could sell on eBay, Craigslist, or at a garage sale. Drumming up some extra cash by selling items you no longer need or are ready to part with — and using the proceeds to pay down debt — can help you rapidly lighten your debt load.

6. Consider cashing in your life insurance

Cashing in your life insurance may be a viable debt payoff strategy because it will give you a chance to pay down larger amounts of debt quickly. If you feel like you are drowning in debt and don’t have beneficiaries that need to benefit from your life insurance policy — for example a spouse or children — then it might make sense to use those funds to pay off debt.

This strategy doesn’t apply if you own a term life insurance policy. It only works for those with whole life policies that have built up cash value. It’s also important to note that even if you do have beneficiaries, you may be able to tap into part of the cash value of your whole life policy, getting cash for debt reduction and still leaving some life insurance proceeds to your loved ones.

7. Make more money

If you’re very determined to pay off that debt within the year, you should look for ways to increase your income and use that extra money to pay off debt as quickly as possible. Whether it’s taking on a part-time job or negotiating a raise with your boss, think of some ways to start earning more money for at least a few months and make debt elimination a high priority.

8. Do a credit card balance transfer

Most of us typically tear up all those credit card balance transfers that arrive in our mailboxes. But if you want to go on a tear with your debt reduction efforts, a balance transfer can help. By transferring high rate debt to a zero percent deal — one that lasts for 12 months or so — you eliminate all credit-card interest. That frees up cash flow, giving you additional money to knock out those credit card bills. Just read the fine print before signing up to make sure you are really getting that low rate.

9. Use a statute of limitations law to eliminate old debt

Some people pay off old credit card debts — really old ones — even when they’re no longer legally obligated to do so. We all want to repay our bills. But if times are especially tight and you just don’t have the money, you should focus on current debts and consider forgoing repayment of old bills that are 7 to 10 years old, or even older.

Each state has its own set of rules regarding outstanding debts. Some states don’t allow a debt collector to collect a certain type of debt after a certain period of time; others limit the amount of time when a creditor can sue you over an old debt. Either way, you should find out whether the statute of limitations has passed regarding an old debt you may owe. If it has passed, you can likely forgo repayment without worrying about financial, legal or credit consequences plaguing you.

For more information about dealing with old debts, contact your state Attorney General or the consumer protection agency for help and advice regarding your state’s statute of limitations on credit card debt.

10. File bankruptcy to discharge your credit card debts

Bankruptcy should only be used as a last-ditch option to rid yourself of debt. But under extreme circumstances — as when you have no income or you have completely unmanageable credit card payments or medical bills — a Chapter 7 bankruptcy filing is appropriate to discharge credit card bills in their entirety.

If you feel morally obligated to repay your debts, you can also look into Chapter 13, which reduces some of your credit card bills. Then you repay the remaining debt over a three- to-five year period.

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