Millions of students around the globe, who’ve probably become working adults now, have a student loan debt on them. Where some may simply borrow just a few thousands, others borrow a hefty amount. The similarity among them is that they all want to pay off their loan amount ASAP!
Once you’ve managed to graduate and found a job, all you can think of is paying off your student loans, which in turn makes saving a tough job. This is when you start wondering, if there is any way you could pay off your loan much faster.
Table of Contents
- 1 How to Pay Off Loans Faster
- 2 Grants To Pay Off Student Loans
- 3 Conclusion
How to Pay Off Loans Faster
For decades, people have struggled to pay off their student loans, especially if they’re doing a job which pays them less than their qualifications. Well, you don’t have to fear anymore, as in here you’ll find creative ways to pay off loans.
Let’s dig in!
Paying More Than the Minimum Amount
Perhaps the best and most simplest way to pay off your student loans at a faster rate is to simply just pay more. Of course, you don’t have to pay a double or triple amount. Maybe, all you can afford to pay more is $50 or $100.
That should not hinder you as any amount you pay more than the minimum, will help you pay off your student debt much sooner. It’s vital for you to double check that the loan servicer you’re paying your loan off to, is including your extra amount to your loan principal.
Of course, as your financial situation allows, you should increase the extra payment amount as it will further expedite your repayment timeline. You must be wondering with the extra mount, how much faster will you be able to pay off your student loan.
Well, this is where the student loan payoff calculator comes along:
All you have to do is enter your loan balance, interest rate and loan term. After that you can adjust your increment amount by using the slider, and the calculator will determine when you’ll be able to fully pay off your loan. Isn’t that amazing?
Perhaps, you’d rather not make extra payment to pay off your student loans faster. What you can do instead is, refinance your student loans. Refinancing allows you to consolidate your student loan, lock down lower fixed rates, reduce the monthly minimum installment, or even reduce the term of your loan, and technically pay less overall.
However, refinancing is only eligible if you have a credit score in the higher probability of 600s, a steady monthly income, and a good credit history. Refinancing doesn’t apply to those using the federal loan benefits, such as income-driven repayment.
The benefit of refinancing is that instead of multiple student loans, your loan will be replaced with a single private loan at a much lower interest rate. Moreover, you can further choose a new loan repayment term, shorter than the one you had initially received.
Do be mindful that this could increase your monthly payment, but in return you’ll be paying off your student debt at a faster rate and also save on the interest rate. Furthermore, you’ll only have one bill to pay off, as compared to your previous multiple bills.
You can see your options by using the refinancing calculator:
Start a Side Hustle
Freelancing is becoming more common and popular in recent months, especially after COVID-19 hit the world. With unemployment at its peak, freelancing allows you to boost your resume, and in fact, do something that you’re passionate about.
You don’t have to be a freelancer in an office, you can do it remotely. This actually allows you to save on your expenses. If you’re willing to work independently and put in the required amount of time and effort, you should consider freelancing, even if it’s full time!
By having a freelancing side business means you will be able to save up more, and perhaps pay off a little more each month. For example, if you’re passionate about writing, editorial or etc, freelancing is a great opportunity for you.
Fiverr is one option where you can begin this side hustle of yours. Being a freelancer opens many more better employment opportunities, to an employer all the way to a startup. Do give it a shot if there is absolutely anything you’re passionate about!
Use Your Job As a Leverage
Talking about jobs, there are some ways in which your day job may be able to help you in paying off your student loans faster, too. There’s a term called Student Loan Forgiveness Program.
Basically, quite a few types of employment offer these programs in exchange for you to work in a particular service capacity. Doctors, nurses, lawyers, federal agency employees and a number of other industrie’s employees might be eligible for the Student Loan Forgiveness Program.
There’s another program called, Student Loan Assistance. Certain percent of employers have begun offering these programs in theri benefits package. This is worth the research while you’re looking for other work opportunities or you could ask your current employer if they offer any such programs.
Even if it’s not mentioned, there is no harm in trying to negotiate this to be a part of your compensation package, as this will enable you to pay the remaining of your loan amount faster. Hence, analyze if these programs align with your career goals.
Make Life Saving Donations
Now, this isn’t just a creative way in paying off your student loans faster, but a humanitarian way too. People all around the world play a part in blood donations, helping hospitals have all the right blood types needed in case of an emergency.
Blood donations simply take an hour, and you usually receive almost $50. If you donate your blood twice a week, you’ll be able to make $400 each month. You can further use this amount to pay down your student loan.
Do note that both payment methods and time commitment differs based on the demand of your blood type. Generally, if you’re an O- or any other blood group which is in demand, you’ll be paid higher.
Furthermore, you can also consider donating your plasma. Scientists and medical researchers use plasmas to create life-saviour therapies for individuals who have immune deficiency, and bleeding disorders. By donating so, you could easily earn $400 monthly.
However, before deciding on these donations, you should see your doctor and get health screening. If you have a medical condition that might be affected by doing so, you should not opt for these options.
Tax Deductions and Credits
When you’re paying off your student loans, don’t miss out on any form of deductions you can take advantage of. There are two forms of tax deductions related to school, that may help you in reducing the tax burden on your loan amount.
This is greatly beneficial for both students and rect graduates. The student loan interest tax deduction will enable you to bring down your taxable income by $2,500 or less on the interest charged on student loans, for the year you’ll be filing.
There is an eligibility criteria, such as:
- Must have paid interest on a loan that is in your name
- Should be half-way through your degree program when you took the loan
- Have been filing as “married filing jointly” or a single taxpayer
- If you’re filing as a single taxpayer, your Modified Adjusted Gross Income ought to be less than $80,000
- If you’re filing as a joint taxpayer, your Modified Adjusted Gross Income ought to be less than $160,000
- You shouldn’t be claimed as a dependant on anyone else’s tax returns
The other type of deduction is a tuition and fees tax deduction. This allows you a deduction of up to $4,000 every year for tuition and fees. In contrast to the student loan interest deduction, this is only claimable of tax years you paid your educational expenses for.
Hence, why this is only applicable for students still in schools, or those who are returning for further studies and are still paying off their student loans. Your eligibility for this deduction solely depends if you had paid qualified education expenses for your higher education, or for an eligible student – such as your dependent or a spouse.
Lastly, if you’re currently still in school or are back to complete your graduate studies, you might even be eligible for tax credits. This will inevitably reduce the tax amount of your student loan.
Grants To Pay Off Student Loans
We’ve by far established that the monthly student loan payments seem to impact are huge portion of the young generation – in terms of their personal ability to follow up on different long-term financial goals, such as, buying a home, starting a business or working on an investment portfolio.
Thankfully, there are some grants that can provide a helping hand to these individuals in paying off their student loans faster so that they can shift their monetary responsibilities on other important factors.
Of course, none of these funds from the grants need to be paid off, as long as candidates adhere to the terms and condition of the grant. These grants are generally quite competitive, depending on the industry the person enters after graduation.
Let’s check out some of these grants.
National Health Services Corps (NHSC)
The NHSC loan repayment helps you pay up to $50,000 for the student loan amount you took. This program is only for medical professionals who have signed a 2 years service contract to work in any Health Professional Shortage Area (HPSA).
HSPAs areas are identified to have insufficient health care providers who work in primary care, mental health or dental care. Individuals working at HSPA sites, who have a 1 or higher score, meet the eligibility for the full repayment amount of $50,000. Whereas, those who have scored 12 or below, are still eligible but for a lesser amount of $30,000.
Moreover, individuals who have a remaining unpaid student debevern after their 2 years service contract, can opt to apply for the continuation of contract. If their application is approved, NHSC will help by paying off the entire remaining amount of their student loan.
National Institute of Mental Health (NIMH)
The NIMH loan repayment program is established for health professions who are eager to pursue research oriented careers such as behavioral, biomedical, clinical and social research projects.
Their grant program will help you repay $50,000 or below of your student loan amount every year, in return you’ll have to work in a research funded by an American based nonprofit organization for a period of 2 years.
Moreover, they reimburse both state and federal taxes that result from the repayment award. Fun fact – these loan benefits are on top of the salary you receive for the research.
Teacher Loan Forgiveness Program
The Teacher Loan Forgiveness Program is a federal loan repayment program. Low income schools have a lack of teaching stadd, hence for the eligibility to receive the grant amount, teachers have to serve for a period of 5 years in a low income school.
By doing so, this program forgives $17,500 or below of the teacher’s student loan amount, but on qualifying loan types. Teachers need to be highly qualified – have a bachelor’s degree and have received a full state certification.
Lastly, the teacher shouldn’t have any loan balances before October 1998. The application for this loan repayment program should be tuned in after the teacher has completed their 5 years of service, and not anytime before that.
All the way from the fastest way to pay off student loans to grants offered to repay student loans, you have a number of options. We understand that it gets defeated over time when you keep paying each month, but we hope with these options, you know that there is a faster way to be over and done with your student loan repayment responsibility!