Going to college is great, but it does have its downsides. The most significant of these is the student loans you have to start paying back after graduation. It’s never fun parting ways with your money, especially when you’re still trying to forge a career for yourself. However, there are ways to pack back your loans efficiently without completely draining your bank account.
Consolidating your loan
How many different loans are you trying to pay back at once? When you’re trying to balance several at the same time, it can get incredibly confusing. Luckily, if you don’t want to keep track of them all, you can transfer everything into a Direct Consolidation Loan. The benefit of this is that you only ever have to worry about one payment a month, saving you a great deal of hassle.
Unfortunately, consolidating your loan could adversely affect your interest. There’s a possibility this method might increase your interest rate, albeit only slightly. It all depends on the weighted average of your various loans. However, while this side-effect might be an inconvenience, that doesn’t mean you should rule out consolidating your loan.
Upping your payment
It sounds crazy right, but hear us out. Although increasing how much you pay back at once means you have less money now, it could really benefit you in the long run. One of the greatest issues with student loan repayments is the interest that gets added year after year. It can feel like you’re never making any progress because, for all the money you pay back, more gets added to what you owe.
By upping your payment, you reduce the time it’ll take to pay everything off, and ultimately save yourself thousands in interest. Obviously, this method only works if you have an extra $100 or so to spare a month, but it’s still worth considering. Making a bigger sacrifice now could mean you’re free of your student loans sooner rather than later.
Refinance your loan
Refinancing is generally considered the best way to pay back what you owe because it combines everything into one loan with a lower interest rate. Given how much the latter can mess with your repayments, finding a way to reduce your interest is always ideal. Plus, refinancing allows you to pay things off in single month installments, meaning you don’t have to worry about keeping on top of multiple payments.
The only problem with this method is that it can be hard to do if you’re recently out of college. If you want to get accepted for refinancing, you need a strong credit score and proof of financial responsibility, as well as several years of work experience. However, for anyone who has this stuff, refinancing could be a massive weight off your shoulders.
It’d be great if we never had to pay back student loans, but they are there for a reason. It’s thanks to them that we get to enjoy college, so it’s only right that we give back the money eventually. At least there are ways to do it that make the process quick and easy.