4 Smart Strategies for Repaying Student Loans

Developing smart strategies for repaying student loans is a great way for you to save time and money. Student loans are becoming an increasing part of modern life. With more people being educated in secondary institutions, student loan balances are growing by the day. Paying special attention to the way that you pay off your balances is important. If you haphazardly pay them off, you could be leaving money on the table. Here are a few smart strategies for repaying student loans. 

1. Look at Your Interest Rate

The first thing you should do to determine whether or not you need to do anything with your student loans is look at the interest rate. Student loan interest rates are notoriously low. Therefore, it might not be in your best interest to pay them off quickly. Many times, student loan interest is the cheapest interest that you can get anywhere. If you can use excess money to pay off other debts first, it may be to your advantage to leave the student loans as they are. Focus on your other debts first and eliminate high interest like credit cards or department store cards. Once those are done, you can pay off the student loans. 

2. Consolidate Your Loans

If you've gone to college for several years or transferred from one institution to another, there is a good chance that you have several different student loans. If you have four or five different loans, it can be confusing and result in you missing payments or making late payments. The last thing that you want to do is miss student loan payments as it will affect your credit score. Consolidating your loans into one student loan will make the process much easier to deal with. Many times, you can even get a lower interest rate simply by consolidating. There are a number of resources out there to help you consolidate and you should check them out if you have multiple loans. 

3. Make Extra Payments

Whenever you pay interest to someone, you are costing yourself more money in the long run. Therefore, if you can afford to make extra payments, try to pay down your balance. Making an extra payment or doubling a payment will directly reduce the principal on the loan. The faster you reduce the principal, the faster you will pay off the debt and be on your way to a debt free future.

4. Avoid Forbearances

Loan forbearance is very common. It involves getting permission to not make payments on the loans for a certain period of time, due to extenuating circumstances. While it can help you in a pinch, the interest keeps accumulating. This means that the loan balances are growing over that time period, which will take you even longer to pay off. Try to stay on track and pay off your debt as quickly as possible. The longer a loan goes it extended, the more you have to pay.

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