Paying back the student loan that you the government or a bank is an intimidating task. When you graduate from college, you have to search for a new job, a place to live, necessary things you need, and a whole new city. Upon all this there is a constant reminder of the loans you have on your head, that needs to be paid off as well, is terrifying.
But you don’t need to freak out that easily. You will be able to pay off your student loans. It will definitely take time for sure but with determination a solid work plan nothing is impossible. This article will assist you in making that plan. Just go through it and you will discover that you can make yourself debt-free from having thousands of dollars of student of laon.
The foremost thing before discussing the details is knowing the reason why is it necessary that you pay off your student loan asap.
Let us assume that your loan’s principal amount is $30,000 and the rate of interest can be safely assumed to a modest 4.5% P.A. Now if you plan to pay the loan over a span of 20 years the interest amounts to a whopping $15,550. But if you decrease the span of the loan payment to 10 years, the amount you save on your interest is $8,240. Similarly for five years, you’ll be able to save $11,993. That is just by decreasing the amount of time you take to pay off your loan is enough to buy a new car. Getting rid of the tension of paying your student loan and the experience of being debt-free is priceless. Once the loan is paid off you can opt for your hobby as your profession, or travel around the world and plan your future in a better way.
There are also many added disadvantage if you plan on defaulting on your student loans. Student loan debt is worse than other types of loans. You should not default on it at any cost. When you default on your loans, you run the risk of ruining your credit score, that makes it difficult for you to sign up for other essential amenities of life, like getting an apartment or a credit card. Also the more you delay the more your debt increases. Student loan are on an accruing interest. If your student loan is from the Government then the government can easily garnish your wages or add a default fee. Then your employer can withhold your salary/ paycheck and send that money to the government treasury.
Listed below are a few tried and tested ways in which you can come up and pay your student loan as early as possible and win a debt free life.
- Have a Positive Outlook(When you are tensed you tend to make disastrous decisions and end up in trouble).
Make a proper plan after you understand your loan.
- Make a Budget and try following it.
- Consolidate your loan.
- Start paying while in school (from your pocket money or part time job savings).
- Enroll in auto debit(this gets you a discount).
- Get help from your employer.
- Volunteer for Peace Corps or Americorps.
- Switch from monthly to biweekly and if possible deposit more than the minimum required(this reduces your interest amount).
- Pay through websites that offer some cash backs.
- Always show your student loan payment receipts while filing your taxes and avail tax reductions.
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