The problem of student debt is worse than people assume. Five years ago, total debts have exceeded $1 trillion and with tuition fees continuously rising – it’s safe to say this burning issue isn’t going away. In addition to the devastating fact that high costs are turning education into a privilege, student loans are also taking the mental and physical toll on those pursuing a degree.
But when people are forced to participate in a certain system, there’s nothing else to do than to find a way to adapt. Last year was marked by Elizabeth Greenwood faking her death to escape over $100.000 in student loans. While these extreme measures might not be the best option, there are ways you can pay off student loans fast in 2017.
Pay More Than the Minimum, Starting From Variable Private Loans
By paying more than the minimum monthly payment, you’re reducing your loan’s principle which prevents interests from accumulating. The more balance you take off, the lower your interests get. In addition, you should prioritize settling variable private loans first. Interest rates of this type of loans are expected to rise up to 6% in the next four years, putting more financial burden on students. Commit to eliminating this debt – you can do so by segmenting your payments. Divide payments and make one per every two weeks and you’ll end up paying off more per year. There are 52 weeks in a year: by making a payment every other week, you’ll pay off 26 payment, i.e. 13 full monthly payments.
Check Refinancing Options
Even though rates in the case of variable private loans are less predictable, they typically start out lower than in cases of fixed-rate loans, which is why students choose them. Lenders are not held responsible for the rates increasing. Here’s why you should think about student loan refinance options: you can switch to a fixed rate and get a lower interest, benefit from a more flexible repayment plan, and consolidate all debts into one. It could be a smart strategic move, although caution is advisable. Many make the mistake of locking themselves in a plan that implies small monthly payments, but also a large loan’s lifespan and increasing interest over an extensive period of time, for example, 25 years.
Turn to Your Employer
Employer student loan repayment is getting more popular for eliminating debt. Basically, employers who offer this type of help provide monthly financial aid that’s somewhere between $100 and $300 on average. So, how beneficial is this to you in real life? A little bit of math: an average student loan debt in 2016 was around $37.000, so if you have a ten-year plan and an interest rate of 6%, you’re expected to pay a little more than $410 per month. After a decade, you will have paid around $12.300 in interests. But with the monthly help of your employer in the amount of $200, you’ll be able to pay off your loan in just 6 years and with around $7150 interest. Negotiate these options when discussing salary.
Ask Around About Tax Deductions
Did you know you may be entitled to tax deductions regarding student loans? A person who is eligible to apply for the tax deduction can expect to save up to $2.500 on student loan interest in a year. However, your income has to be lower than $80.000 and if you earn between $65.000 and $80.000, the deduction is reduced. Needless to say, you can only deduct loans if they come from qualified sources. Loans from friends, family, or your employer don’t count. Most of the U.S. colleges are part of this system, so take advantage of what IRS has to offer if you’re eligible to apply.
In addition to these tips, always have a budget plan in mind. Remember: consistency is the key to paying off your student loans.