Further education is a fantastic way to broaden your horizons. By studying at college or university, students are able to boost their skills in various areas, and this can lead to significantly improved job prospects. Not only are graduate schemes a fantastic opportunity to land a job straight after university, but most employers nowadays value further education certificates. Moreover, for some job applications, a degree is a fundamental requirement.
That being said, it is no secret that getting an education can be expensive. Consequently, if you cannot afford to pay for tuition or accommodation costs outright, then taking on a student loan is one way to ensure that you can still get the qualifications that the job market craves. As with any loan though, repayments can become overwhelming at times, and therefore paying off your student loans as quickly as possible is the best way to avoid an excessive amount of interest.
So, let us discover 3 strategies that can help graduates to pay off student loans faster.
Make Larger Repayments
It might seem intuitive, but if you are able to do so, making a bigger contribution to paying off your student loans sooner rather than later is strongly recommended. Put simply, by upping your loan repayments, you can cut down the principal balance of your loan and minimize the period during which interest is accrued. Raising your student loan repayments by as little as 5 percent is sometimes enough to make a difference to your final total.
Furthermore, if you are able to send repayments every two weeks as opposed to monthly, this can also be beneficial. Doing so can even have a positive impact on your credit score. Accordingly, to find out whether making more regular repayments to your student loan provider could work for you and your budget, take a look at this blog post. Essentially though, reducing your spending now might be all it takes to accommodate any potentially larger student loan repayments.
Get a Part Time Job While You Are Still in Education
If your studies allow for it, getting a part time job while still in education can help to keep your student loan payments in check before they even get chance to escalate. You can use the money that you are earning through working to offset your student loan debts as you learn. For instance, if you are earning $500 a month through part time work, this will leave you with $6000 to contribute towards your student loan repayments.
Although balancing coursework, assignments and exams with a job can be demanding, if you are driven, or if your course encourages part-time work placements, you could set up a student loans savings account right away and add your wages to this reserve. The hospitality and retails sectors are almost always hiring, and if you are living on a student campus, you could reach out to your career advisor to learn more about any on-campus roles.
Set a Budget and Stick to It
Whether you are a recent graduate, or a university fresher, it is never too late or too early to learn about budgeting. Failing to appropriately manage your finances can hold you back from paying off your student loans as quickly as you might like. Plus, student loan repayments can slowly start to eat into other more fulfilling life investments if left unchecked. Try to carefully plan and understand your monthly cash flow and identify areas where you can make sacrifices to avoid falling behind on any loan repayments.
Developing a budget is all about setting savings goals on a monthly or weekly basis. If you are able to be frugal in some areas, such as when shopping for groceries for instance, you can afford to save money that can be used to pay off a portion of your loan more quickly. Financial health is everything and so assessing your spending habits and ability to budget now can help you to stay on the right path.
Ultimately, it can take anywhere between 10 to 30 years to fully pay off student loans. Above all, the loan repayment period and the repayment plan will always vary based on the individual and other important factors such as the loan interest rate, the final amount of money owed, as well as the total annual income. By doing your research, and comparing your options, you can pay off your student loans more quickly, freeing up money that can be used to save for retirement, to improve your credit score, or to avoid the accrual of interest.
Do you have any tips for paying off student loans more quickly?