Student loans are one of the most difficult loans to pay off. When people take out student loans for college, they usually have no idea how much they’re going to have to pay back when they’re finished. The money adds up fast and often ends up being far more than they can afford after school is finished. If you have found yourself drowning in unanticipated student loan debt, you need to know some tips for paying back your student loans without going broke.
Make Higher Payments
If the total amount of your loan is the issue and not your monthly payment, paying back a larger amount every month is the best way for you to pay back your loans. Interest on a loan is what ends up costing people. When you pay your mortgage, a car payment, or anything else you have financed, the majority of your payment goes to the financing and a small portion goes to the principal.
Whenever you pay more than your minimum monthly payment, all of the extra money goes toward the principal. For example. If your payments are $400 per month, but you decide to pay $700 per month, that is $300 each month going toward the principal, drastically cutting down time and money off of your loan. You can take months or even years off of a loan by making extra payments.
Consolidate Your Loans
Some people have more than one payment on their student loans. When you take out student loans, you end up with a dozen or more loans that are worth a few thousand each. If they’re from the same company, the company will add them all up, basically consolidating them for you.
However, if your loans were sold while you were in school, or you changed schools at some point, you might have loans from more than one company. If this is the case, you have a few different payments that you need to make each month. When students have more than one loan to pay back, they often forget they have others to pay, or some might not even know.
Make sure you only have one payment so you can stay on track for your future and keep your loans out of default. To consolidate your loans, you can get loans from a private lender that allow you to pay off all of your student loans. Once you have paid them off, you will only have one loan to pay every month, making life a lot easier for you. Make sure you explore the option and learn some student loan consolidation tips before you find yourself defaulting on your loans.
Make Income-Based Payments
If even making the minimum payment seems impossible, you can try to lower your monthly minimum payment amount. The amount that you have to pay every month is based off of how much your loan is for and how many years you have to pay it back.
If you have found yourself with bills for $500 payments, but you only have about $100 to spare after your other bills are paid, you can contact your student loan holder to get the payments lowered. Lowering the payments isn’t guaranteed, but if you can’t afford them because of your income, and not because you’re living above your means, getting them lowered shouldn’t be difficult.
Many student loan lenders will allow you to fill out the paperwork right online. You will give your financial information, and it will calculate what you should be able to afford based off of your monthly income. You should have a new payment amount immediately, or almost immediately, to tell you your new minimum payment amount.
Cut Back on Expenses
Most people don’t realize what they can actually afford. You have rent or a mortgage, a car payment, insurance, cable, cell phones, and many other monthly bills. Life is expensive, and it can be very stressful. If your loans are as low as they will go and you still can’t afford to pay them back, you need to find ways to cut down your bills. Canceling cable should be your first move.
You can stream TV shows from Netflix, Hulu, or another streaming service for only a few bucks per month. A digital antenna is something you can purchase and use for free every day to watch local channels. This can save your $100 or more each month.
If your cell phone payment is expensive, look into switching to a prepaid service. If your rent is far more than you can afford without struggling, look into moving into a cheaper place, even if you have to get a roommate or moving a little outside of town. You can look into refinancing your vehicle to lower your monthly payments on it.
Many people don’t realize that they can do all these little things to save hundreds each month and make life more comfortable instead of worrying about the same bills every single paycheck.
Student loans can be very stressful, but there are things you can do to remove some of that stress. The faster you get your student loans paid off, the faster you can get on with your life and put them behind you.