How To Pay Back Student Loans Faster

Take Advantage of Borrower Benefits and Rewards

student paying back loansStudent lenders often offer incentives to make their loan products stand out from the crowd. The industry calls these borrower benefits but they may also be called borrower rewards or incentives. While they can often save you lots of money over the life of a loan, you should consider them carefully to see if they will really benefit you.

Examples of benefits:

These benefits are either automatic or they are earned:

But remember to shop around! Not all benefits are included with all loans. Know what you’re entitled to before you borrow, and calculate your savings ahead of time.

Eligibility for Borrower Rewards

To qualify for borrower rewards, you may have to meet criteria specified by the lender. Some examples of these requirements are:

Check with each lender to see how and if you qualify for borrower rewards offered.

Other Important Notes:

5 Bonus Tips on Paying Back Faster

Debt is a burden that nobody wants to carry forever. But paying what you owe faster won’t just save you stress, it’ll save you money, too. So find some ambition and get savvy because you could have more cash to spend on the things you need or to save for the things you want. Here’s how to do it:

1.)  Commit to paying more. A mantra to remember: the longer it takes you to pay off your debt, the more it’s going to cost you. If your minimum payment is interest-only and you never pay down your principal, you could spend thousands without shrinking your debt at all. Also, compounding interest means each extra dollar you pay down now is a dollar plus interest that you don’t have to pay later. Paying an extra $10 now could save you $20 in the long run.

2.)  Pay off high-interest loans first. That usually means your private loans. With higher rates and strict repayment terms, private loans tend to cost more than their federal counterparts. The higher rate means you pay more interest and less principal, so the faster you get rid of them the better. Again, the solution is simple: pay your private loans first.

3.)  Capitalize on small savings like tax deductions. The federal government allows students to deduct up to $2,500 in interest paid on student loans each year. Fill out a 1040 or 1040A federal tax form to claim the deduction, but check with your tax preparer or visit the IRS website to make sure that you qualify.

4.)  Avoid new debt. Nothing makes it harder to pay your debt than increasing what you owe, especially if that new debt comes with a high interest rate. Credit cards are the biggest offender, so consider avoiding them by switching to debit. That way you won’t spend more than you have and you won’t have to choose between paying off your card and paying off your student loans.

5.)  Take advantage of your grace period. Just because you’re not yet obliged to pay your loan doesn’t mean you shouldn’t start planning for the day you are. Start putting money aside each month and get in the habit of saving. Then when you start paying, you’ll have a cushion of savings to fall back on if you find yourself in a hard financial situation. Or you can start off right by paying down a large chunk of your principal, saving you even more in interest you would have paid over the life of your loan.

Potential Pitfalls

Here are some potential pitfalls:

 

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