Graduation day is right around the corner, but it's never too early to start planning how you'll repay your student loans. What you need is a plan, with solid cornerstones and the obvious strategies like establishing and following a budget, keeping close contact with your lender (especially if you fall behind on your payments), and making those monthly payments a huge priority.
That said, there are plenty of “under the radar” tips and tricks you can pull out of a hat to pay off your student loan as quickly as possible.
Trust us, you’ll need them. According to the College Board, the price of a college education keeps going up:
• The cost of tuition at a private four-year university was $25,143 in 2008 (up 5.9% from 2007).
• The cost of tuition at a public four-year university was $6,585 in 2008 (up 6.4% from 2007).
So let’s get to it – presenting the five “unique” tips to paying off your college debt:
Pay more each month – Most student loans are set up for pay-off dates 10 years or more down the road. But the longer your loan, the more interest (and cash) you’ll pay. Nip this pricey problem in the bud by adding $25 or $50 each month to your monthly loan payment. Do this over a period of several years and you can cut a year or two off your total college loan – and save buckets of cash in the process.
Ask your lender for a break – Way too many college borrowers simply shrug their shoulders and pay the amount they’re told to pay by their lender. But one phone call to your lender can lead to a lower monthly payment. How? By asking for discounts on your payment method. For example, many student loan creditors will cut your interest rate if you agree to automatic payments, or for making 12 straight monthly payments in a row. But you have to ask. If not, no discount for you.
Pay Your Highest-Rate Loans First – If you have multiple student loans - like one for undergraduate school and one for medical school – always pay the highest-interest rate loan first. That’s the loan that will do the most damage to your financial standing. The same holds true for private versus public student loans. Chances are, the rates on your private loans are higher, so get those off your financial calendar first.
Turn gift cards into loan-payment cash – College students tend to gather a lot of gift cards from holiday, birthday and graduation gifts. But don’t spend them – turn them into cash at gift card barer sites like PlasticJungle.com or CardWoo.com. Once you have the gift card money in hand, plow it straight into your student loan debt. Do this, and you’ll chop even more time off your student loan debt.
Leverage your debt with a family loan – See if you can’t hit up Mom or Dad for a low-interest or no-interest loan, for the same amount (or whatever loan amount you can get) of your student loan. Most private loan rates can climb to 6% or 8%, depending on your lender. Public student loans offer more reasonable rates, but even at 4% or so, it adds up. If you can get the family to give you a loan at 2% or less, you’re saving lots of money in the long run. Just set it up as you would any loan, with paperwork, standard agreements, pay dates, and the like, and, most important, pay off your actual student loan with the family money right away.
It really helps to be creative when confronting your student loan debt. Follow the tips above, and see how your creativity translates into disappearing student loan debt – faster than you ever thought possible.