You’re probably wondering how to pay off student loans. It can be complicated and time consuming, but there are several options out there for you to consider. Unfortunately, depending on the kind of student loan you have, it can be impossible to simply pay them off. You may think that bankruptcy is the answer, but there are serious problems with this option for students. In this article, we will give you a few tips that will hopefully help you learn how to pay off student loans.
Ideally, your first step is to determine which of your student loans is the largest. Luckily, you already have a lot of choices for how to pay them off faster, which includes: Make extra payments every month; do the math; and figure out your payment date for each of your loans. Consolidate and repay. Use a cash windup.
Some students have more than one loan, many of them with varying payment dates. If you own a house or other property, use it as collateral for a loan workout. Keep in mind that you will likely have to start repayment on this property at the highest interest rates. However, if you don’t own anything valuable, this probably isn’t an option for you.
If you have multiple student loans, the best next steps are to consolidate them all into one, easy to manage loan. Some consolidation companies will work with you to forgive a portion of your penalties and fees, which can cut your total balance in half. This is often done through a “debitment plan,” which means that you will be required to make a specific monthly payment toward the debt balance until it is paid off. Some companies require a larger amount of forgiven debt at the outset, but it is possible to find a provider that offers a flexible plan. Most companies will offer some sort of repayment plan, whether it be graduated payment plans, pay-as-you-go options, or lump sum forgiveness.
If you own something of value, sell it, donate it, or keep it in escrow to help with your repayment. By selling, donating, or keeping the item, you can begin paying off your student loans quickly and easily. The money you save can go toward any amount of forgiven debt, which will cut your overall balance in half or more.
If your student loans are in collections, don’t despair. Often, the first steps in paying them off are stopping the collection activities. Call the collection agency, and politely ask them to stop calling you and to stop sending you payments. Most non-profit agencies have this provision in their contract, so it’s not difficult to find one to work with.
For most student loans, the payment terms start with the highest interest rates. Your goal should be to pay as much as possible of your balance in the lowest interest rate. Call the lender and ask about their payment plans for the loan with the highest interest rates. Find out how much you will have to pay every month, and set your payment to the lowest of the three. Make sure you understand how much the loan costs over the life of the loan, including interest, principle, and loan fees. Also make sure to ask about any special fees, such as early payment fees or other charges.
Your goal now is to pay off your student loans quickly. Start paying the lowest balance and then move on to the next step. If you don’t move quickly enough, your lenders will file liens against your title. You can avoid this if you follow the above steps. Good luck paying off your student loans quickly!