Back in the day, we thought that a college education would get us that much closer to a perfect job and all the sunny days of summer. But today we know better; a college degree doesn’t guarantee financial success or even avoid unnecessary stress after graduation. This doesn’t mean that education is not worth it, however, one should understand that they should be prepared for student loans they have to shoulder once they graduate.
Student debt is hounding the American dream. You’re expected to graduate college and get that job you’ve been waiting for, but when does it end? When will you be able to move out of your parent’s house? How many times can you run from creditors before they catch up to you? It’s a scary spectre and one that many people face. This can leave them fearful of taking on additional debt following their education period and even more afraid of what happens when they do go back to school.
In this article, we will provide you with feasible and small changes in your lifestyle that can help you pay off your student debt early. What are you waiting for? Let’s jump straight into the article.
Build a budget
Not only for paying off your student loan, building a budget can truly help you in building healthy financial habits in the future. It is one of the effective ways a student can manage their spending habits and also regulate their spending wisely. This doesn’t mean that students have to be strict and not have any fun. The idea of building a build is to track how much and where you are spending your money. Tracking will help you in finding the area where you are unnecessarily spending more money. Once you know where you are unnecessarily spending, dont you think it is easier for you to control your expenses? All the extra money you save by managing your expenses can be saved for emergencies or paying off the extra amount in your student loan.
Choosing the right repayment plan
The bank will offer the students different repayment options and choosing the right repayment plan can change a lot of things for you. If you choose any repayment plan without thinking much then automatically it will impact the duration in which you can repay the complete loan. One thing that you must keep in mind when you are choosing a repayment plan is how long is your moratorium.
As you see, this is important for you to know as you will know how long you have before your first EMI is due. This is why you need to figure out EMI and the right tenure. It is important to check all the repayment options and then choose the one that matches your needs. You see if you dont want to end up choosing a plan that will increase your EMI and become a burden on your pocket then make sure to check everything.
Pay off interest
As you already know, the student loan is different from all other loans your repayment does not start as soon as you receive funding. The EMI will only start once the moratorium period is finished. Usually, the moratorium period is around 6 months to one year. Why not utilize this period to pay off your interest?
As you see, although your repayment starts after the moratorium period the interest on your funds is accumulated from the moment you receive them. So in the future, your repayment amount will include both the original funding and interest. So the best it will take you a long time to repay your loan in full.
However, instead of waiting for the moratorium period to be finished, you can start by repaying your interest amount while you’re still taking your course. Pick up a part-time job or side hustle and start repaying your interest. This way repaying will already become a part of your spending and you will not feel the burden of high EMIs once you are graduated.
Refinance your student loan
In life, there is nothing predictable and this is what scares most people. Any sudden change or expense can burden your pockets, so it is always important to be prepared. Apart from having a student loan, you will also have other living expenses and also may have other loans. So if you are managing many things at a time then it can become highly stressful for you and may lead to medical emergencies.
This is why refinancing your student loan can be an excellent option, if you find a lender who can offer your a better interest rate then your EMI will reduce and you will also be free from stress. If you are looking for low EMI then it is highly recommended to look for refinancing options will low-interest rates.
If you want to maintain a good credit score then it is highly recommended to set your EMI payments to automatic mode. Every time you forget to make a payment because of your busy schedule your credit score will be highly impacted. So the best way to avoid this is by maintaining the EMI balance in your account and setting it up for automatic payments.
This way you will receive reminders and your payments will never be missed and you will have an excellent credit score that will help you in getting loans easily in the future. Not to forget the penalties for missing a payment can also be high so the best way to avoid all this is by setting up automatic EMI payments for your savings account.
In a nutshell,
In today’s world, if you don’t have a college degree chances are you will never make over $1 million. This is the reality; most people are trying everything in their power to go to college to improve their lifestyle or make ends meet. However, there is an alternative to this reality. Most of these fresh graduates are entering the real adult world with student loan burdens on their shoulders.
Many people do pay off their student debts, but since they are still new to managing them, they end up putting themselves on a tight leash that can stop their finances. As you have made it to the end of this article, you will have found different ways to get rid of your student debt quickly. Student loans or any loans can be highly stressful but if you have systematic planning then it is highly easy to manage. If you are interested in more such articles like savings, investing, and side hustles then check out the zeen website.