You have the power to determine how quickly or slowly you pay it off and how much interest you end up paying. Consider the following five ideas to lower the balance of your outstanding student loan:
Make Additional Payments
Make sure, when making an additional payment, you let the lender know that you want the extra payment to go toward the principal only (not to the next month payment). This will reduce how much interest accrues on the loan. If you don’t make this specification, the excess payment is held and apply to the next payment due. This generates interests.
Pay Another $50 to $100 A Month
This can be difficult for some people to do, especially if they’re having a hard time paying their minimum obligations. However, if you can swing it, put an additional $50 to $100 in the monthly payment, which will decrease the principal and save you a plethora of money on the interest.
Do A Lump-Sum Payment
If you took out $100,000 in student loans with an interest rate of seven percent and a 10-year repayment term, a lump sum of $2,000 would shave off four months from the loan and save you about $1,700.
Request Public Service Loan Forgiveness
Student loan forgiveness may soon be eliminated, but if you work in a qualifying public sector or a teacher who meets the requirements, you can apply for the Public Service Loan Forgiveness and Teacher-Student Loan Forgiveness.
Another ideal strategy in getting your loans under control is refinancing them. This can help you reduce your loan rate and payment. You’ll need to decide if you want a fixed rate or variable one, with options to pay the loan back in five to 20 years. If you want to improve your chances of getting the loan refinanced, be sure to apply through multiple lenders at one time.