Like many student loan borrowers, ridding yourself of college debt may be at the top of your list of things to achieve in 2023. If this is the case, there is no better time to begin mapping out your plan of action to make that goal a reality this year.
There are plenty of benefits to paying off your student loan debt. In addition to a higher credit score, you’ll also enjoy the freedom a debt-free style can bring. If you are hoping to pay off your debt in 2023, it might be a wise idea to start with your student loans. Student loans, due to subpar interest rates, may be taking up a big check of your paycheck each month. In order to save money on interest, you’ll want to tackle those loans sooner rather than later.
Consider your budget
Getting to the bottom of your budget will help you approach your student debt repayment with a clear view. The point of evaluating your budget is to get an accurate summary of your take-home income, your monthly expenses, and your current bills. You can also use this to make note of your discretionary spending and, if necessary, make tweaks that will ultimately help you pay off your debt sooner. This can mean altering your entertainment budget or your food budget or cutting subscription services you no longer use. Consider small steps that, over time, can lead to big savings. Examples include cooking at home more often, minimizing expensive weekend outings, and scouring your bank statements for erroneous charges.
Create a student loan payoff plan
Now that you’ve got a clear idea of what your monthly budget looks like, you can begin to map out a plan for how you will tackle your student loan debt once and for all. If you’ve been paying your minimum amount due each month, you are doing yourself no favors in terms of interest. By embarking on your spending with your student loan repayment options in mind, you’ll begin to make wiser choices that see you pay off your debt faster and more strategically.
What does being strategic with your student loan debt mean?
It means allocating payments based on need. Many financial advisors recommend paying off your largest debts first. Student debt may very well be your largest debt, meaning the time to act is now. Here are a few ways you can pay down your student debt faster.
Make bigger student loan payments
Making larger payments than necessary is one of the quickest ways to rid yourself of student loan debt. How much more than the minimum you decide to pay each month will depend largely on your monthly budget and how much discretionary spending you have left over each month. If your current monthly minimum is $200, consider whether it’s feasible to double that amount. By making cuts to other parts of your budget, you might find that putting more toward your debt each month is completely doable. Doing so will, in fact, lead to better financial prospects in the future.
Make student loan payments more often
Making multiple student loan payments per month may be an easier route for you than larger payments. This is because life can be unpredictable and you may not feel entirely comfortable keeping so little money in your account each month. In this case, you have the option of making multiple payments per month so you can more carefully gauge how much you can truly afford. Perhaps you’ve saved money on food this month as you’ve decided to begin meal-prepping, or maybe you’ve decided to stay indoors each weekend instead of venturing out for shopping and dining. If either of these is true, that might mean you have a bit of extra money in your account and can thus afford to make an additional monthly payment. Doing this, over time, will help you get to a student debt-free life more quickly. This is a great option for borrowers considering how to make the most of their private student loan repayment options.
Student loan repayment options
If you find yourself overwhelmed by student debt, there is good news. You have plenty to consider in terms of student loan repayment options. Whether you are dealing with federal student loan repayment plans or private student loan repayment options, you’ll find that a little bit of research can go a long way. Research is particularly important when dealing with federal student loan repayment plans because rates often change yearly, which can mean a big difference in terms of savings. Purefy’s student loan repayment calculator is also a useful tool to consider.
Refinancing your student loans
Despite your best efforts, you might find that you still fall short when it comes to your student debt repayment. Whether you agreed to high interest rates upon taking out your loan or have simply accumulated too much interest over time, there’s a chance that you sink further into debt with no end in sight. If you find yourself in the midst of this unfortunate financial situation, it might be time to consider whether student loan refinancing is a wise option for you.
Student loan refinancing is helping a growing number of borrowers pay off their student debt faster. Refinancing your student loans means you pay off your loans through a new lender and begin paying that lender each month, often at a lower interest rate than you agreed to for your student loans. There are many benefits associated with student loan refinancing. Between lower interest rates and different repayment terms that either shorten or extend your loan period, refinancing means starting anew and securing terms that more closely align with your current financial situation and where you plan to be in the near future. This is what makes the prospect of student loan refinancing so appealing.
Student loan refinancing, like any other big financial move, requires research. In order to learn how to lower student loan interest, you’ll need to compare finance rates through different lenders in order to determine which can offer you the best deal. There are tools to help you do this.
You can use a Compare Rates tool to compare student loan finance rates, which will give you a side-by-side view of what different lenders may be able to offer. This is one of the best things you can do when weighing private student loan repayment options and federal student loan repayment plans. These tools can help you make an informed decision about which route to take in regard to student loan refinancing and how to lower student loan rate. With time, you may find refinancing to be one of the biggest money-saving moves you’ve ever made.
