Last Updated on December 15, 2022
How To Pay Off Student Loans Reddit
If you’re like most people, you’ve probably got some student loans to pay off. But how do you make sure that the money goes where it should?
Here are a few tips for paying off student loans:
-Make a budget and stick to it
-Look into refinancing
-Make extra payments
How To Pay Off Student Loans Reddit
Top 5 Best Student Loan Tips From Reddit Everyone Should Read
We’ve compiled a list of five reddit student loans tips that we hope can help you throughout this process. Read on to learn more about the steps that different reddit users have taken to make the best financial decisions for themselves.
1. Look at all your options
There are alternatives to taking out student loans, and it’s good to look at these options first before applying for one. In this student loans reddit post, user Betsy514 outlines some of these alternatives, including choosing a cheaper school, taking a gap year, and applying to scholarships.
We here at Juno created our own scholarship database with over thousands of options that you can apply to to help finance your education. Come take a look here!
However, if you do need to take out a student loan, which, according to the Chronicle of Higher Education, around 60% of college students do, you should start by looking at all your federal and private options.
Juno has multiple student loan guides that help explain your options, and breaks down the interest rates and costs of these options:
Researching your options is an important step in ensuring that you are making wise financial decisions. These options vary for different schools and programs. For instance, we here at Juno, along with this student loans reddit comment thread, recommend that undergraduate students should always look at their federal options before their private ones. If an undergraduate student meets the federal lending limit for direct loans, they then can turn to private lenders or parent PLUS loans and explore their options there. Look to our guides linked above to determine which options are best for your program.
2. Create a budget to cut down on spending
If you have taken out student loans and are working to repay them, creating a budget can be helpful. Budgeting allows you to be more organized with your repayment plan and helps in setting you up for financial success.
This comment on a student loans reddit advice post breaks down where to start: “First you need to sit down and totally understand your income and your debt and create a budget based on your goals. This is going to take a lot of time. Here’s what you need to know:
- What is your household income?
- List all debts smallest to largest and their interest rates. Student loans and everything else except mortgage.
- List monthly expenses.
- Do you have an emergency fund/how much savings?”
A key part of budgeting is to try and cut down your spending on luxury items.
In this student loans reddit post, user TheChilledPixel details how they paid off $115,000 in student loans.
“(I) used to pay large chunks (think $2.5k – 3k) of my paycheck right after it hits my bank account. Didn’t go out to eat (or get takeout in COVID times) often when my friends pressured me – opted to make home cooked meal and have a cookout at home instead. Got super aggressive with repayment in the past year. I mean like lean lean spending. Only spent money on the rent, phone, utilities, gas and groceries.”
It can be difficult to create a budget and cut down on spending, but if you have outstanding student loan debt it is definitely something to prioritize. User TheChilledPixel is now completely debt free! Budgeting and spending your money wisely is effective, and can help make your student loan expenses much more manageable.
3. Make your payments on time
Interest accrues on your student loan payments, so make your payments sooner rather than later to avoid having to pay extra costs. To make these payments in a timely fashion, try cutting down on your spending — especially when it comes to luxury items.
Reddit user yes_its_him’s reddit post on personal finance emphasizes the importance of staying on top of your payments: “Pay them back on schedule. It sounds crazy, but it just might work! If your income supports it, pay the minimum on low-interest (<~4%) loans. If you have even more income, repay them faster with extra payments, especially on higher interest loans, and save by paying less interest than you would over time.”
Don’t rely on student loan forgiveness and postpone your loan payments. Make sure to pay them back on schedule so you don’t have to pay more than anticipated.
4. Pick up a side hustle or part-time job
If you’re having trouble paying off your student loans with just your primary source of income, consider picking up a side hustle or part-time job.
This student loans reddit thread details various jobs and activities people have picked up to help pay off their loans, including pet sitting, bartending, officiating, and miscellaneous online jobs. These online jobs have flexible hours and you can work in the comfort of your own home!
If you have the time and can make the commitment, a side hustle or part-time job can prove to be very useful, providing you with more flexibility in managing your money.
5. Consider refinancing your private student loans
Refinancing your student loans isn’t always the best option for everyone, but can be very helpful in some cases. Currently, federal student loans are not collecting any interest until October 1, 2021 as part of COVID-19 relief. However, if you are currently repaying a private loan with a high interest rate, refinancing may be your best option, allowing you to lower your monthly payments and save more money.
In this reddit post on student loans, user Zaerth talks about their experience with refinancing their private loan. “I’m going from paying nearly $900/month toward my private loans to $515/month. I extended the life of the loan by a few years in order to get that rate, but I’m planning on refinancing again in a couple years. And I can always pay more than the minimum payment. But for now, it’s a huge relief.” Zaerth said they wished they refinanced years ago.
Juno can help you to find a student loan or refinance a loan at the most competitive possible rate. We get groups of buyers together and negotiate on their behalf with lenders to save them money on private student loans and private student loan refinance loans.
how to pay off 50 000 in student loans
How to pay off $50K in student loans
Americans currently owe nearly $1.9 trillion in student loan debt, according to FinAid. Two million borrowers owe more than $100,000. That’s not surprising when National Center for Education Statistics data shows that attending a private, four-year college or university costs an average of $28,123 per year. This figure doesn’t take into account room and board, books, or other expenses.
That may sound like a lot, but it’s a hurdle you can overcome. Here’s how.
Explore loan forgiveness options
Student loan forgiveness comes with strict eligibility requirements. But if you qualify, it’s possible to have some or all of your federal student loans forgiven. Several types of forgiveness, discharge, or cancellation are available for borrowers of Direct Loans, FFEL program loans, and federal Perkins loans. But you may have to continue making payments during the application period, which can take several months, and there’s no guarantee your application will be approved.
If your application is approved and you qualify for forbearance, cancellation, or discharge of only part of your loan, you must still repay any remaining balance. But if the full amount of your loan is forgiven, discharged, or canceled, you no longer need to make any loan payments.
Consolidate federal student loans
If you have multiple federal student loans, you may want to consider consolidating them into one fixed-rate loan at no cost to you. Consolidating into a Direct Consolidation Loan doesn’t guarantee you a lower rate. Your new interest rate will be an average of the rates on the loans you’re consolidating. But you may benefit from the simplification of having just one loan payment to keep track of.
If you have outstanding Perkins or FFEL loans, you may also want to consider a Direct Consolidation Loan, especially if you want to take advantage of the limited-time PSLF Waiver — where you receive credit for past payments on Direct Loans. But this only applies if you have Direct Loans, if you’ve already consolidated loans into the Direct Consolidation Loan program, or you want to consolidate your loans into this program by Oct. 31, 2022.
Consider income-driven student loan repayment plans
If your outstanding federal student loan balance is a substantial amount of your annual income or you simply need to make lower monthly payments on your student loans, you may qualify for an income-driven repayment (IDR) plan.
While in deferment (which is currently set to expire on Jan. 31, 2022), you won’t have to make a payment, but you also won’t be making any headway in paying back your loans. So, income-driven repayment plans can help. You can choose from four types of plans:
- Revised Pay As You Earn Repayment Plan (REPAYE)
- Pay As You Earn Repayment Plan (PAYE)
- Income-Based Repayment Plan (IBR)
- Income-Contingent Repayment Plan (ICR)
You may qualify if you’re not on an IDR plan but want to lower your monthly student loan payments, or you’re on an IDR plan but need to recertify or make a change to your plan. Keep in mind that if your student loans are in default, or you have Parent PLUS loans, you can’t apply for lower monthly payments through this program.
Refinance student loans
Refinancing your current student loans with a private lender — bank, credit union, or other financial institution — has both benefits and disadvantages. Refinancing could give you a lower interest rate and possibly better terms, which can help you save more on your monthly payments over time.
But if you refinance federal student loans into a private student loan, you give up the benefits of federal student loans, including access to IDR plans. Also, to get the very best interest rate on your new loan, you’ll likely need a good to excellent credit score. On the other hand, many lenders allow cosigners, which can help you qualify.
Make lifestyle changes
Making some spending and lifestyle compromises could help you pay off your student loans faster. Look at your budget and see where you can make some changes to save money. Then, put the reclaimed dollars toward your student loan debt. You might also consider taking on a side hustle to make some extra money to put toward your student loans.
While still attending a community college or a four-year university, you may want to set a goal to pay the interest on your loans. It may not seem like much, but paying interest early on can really add up by the time you graduate.
Try the debt avalanche method
The debt avalanche method is a strategy for paying down and paying off debt. Start by determining the debt with the highest interest rate and paying it off first. Then you’ll pay off the debt with the second-highest interest rate, and so on.
This approach helps you pay less total interest in the long run. And completely paying off a debt can give you a psychological boost.
Use the debt snowball method
If you’re motivated by seeing balances disappear quickly, you may instead choose to use the debt snowball method. With this method, you pay off the smallest balances first. You’ll likely pay more in interest over time, but you’ll see balances disappear sooner, which can make the most significant impact on your perception of paying down your debt.
