Taking student loan and repaying them becomes a complicated task as it piles up. Are there any practical hacks to deal with student debts? Is there any way to make life easier because time flies like anything? College did give you a degree and help you choose the right career for yourself. But, if the average debt has piled up a lot, your handsomely paying job may fall short of getting you out of trouble.
You cannot make the debt disappear or find rich in-laws from nowhere to help you out with the money. You have to think realistically and tackle the monetary problems immediately.
You only need to learn some hacks to alleviate your stress levels by reducing the debt load in no time. Here are some creative hacks to get out of the vicious trap of student loans that you must repay urgently.
Handle Interest-Only Payments First
The accruing interest on student loans you had taken can further deepen your stress levels, so tackle the interest-only payments first. Pay off the interest-based student loans to keep the debt graph down.
For example, if you have taken a loan of $9,500 with a percentage interest rate of 3.75 on your loan; you will owe around $35 per month and approximately $350 as an interest per year. As you continue to borrow money each semester, it is best to tackle the interests first to keep your debt balance low. By the end of your study period, you will owe only the loan amount rather than the heaps of interest incurred on each of them.
On the contrary, if it is difficult for you to manage the payment of the debt before graduation, you can opt for the grace period to make all the interest-only payments you owe. The Grace Period is post-graduation 6-months time frames when the borrowers are given time to start a career and begin to earn a handsome amount. During the grace period, no student loan payments are due, so that you can easily tackle the previous payments.
Here is a tip for you: during no payment time, try to pay the interest payments before they can heap up further.
Benefit from Student Loan Discounts
You can negotiate for a discount on the tuition fee so that the college costs can be decreased. On the other hand, you can also ask for a decrease in student loans.
Until the previous year, borrowers having Wells Fargo-originated loans could apply for a discount in the Amazon Prime. Even if the offer has ended now, you can find other discounts on student loans as well.
Always make timely loan repayment to qualify for a decrease in principal and interest rate. After graduation, about $750 is discounted on your principal loan amount by the most lenders. For borrowers that make regular repayments and are about to repay all their loans completely in near future, lenders often forgive the last four to five payments. If your budget is tight and drops down to the limit of $500, your loan may be forgiven by the lender for your sincerity and regular repayments.
You can also approach the Department of Education to grant discounts 0.25 percent on the interest rate in case of Direct Loans. They can refund you 1.5 percent of the money within a year of loan disbursement because of timely repayments.
Take Loans Without a Cosigner
There are times when you are unable to find a cosigner for taking loans and find it impossible to have a way out. If you are a newly enrolled student or an immigrant, the lenders can agree to lend you money without a proof of strong credit history. There are various ways to take loans without a cosigner that will surely help you pay for the house or car you want to buy after graduation. Click here to find out how you can get a loan without any cosigner.
Schedule Your Student Loans Repayment Twice a Week
Whether it is the period of forbearance or deferment, keep in mind that the interest is piling up at all times. Most of the borrowers are unaware of the fact that the incurring interest is accruing on daily basis rather than on a monthly or annual basis. Interest is incurred by the lenders to make extra money, and they profit by lending some amount to you. So, it is best to make a habit of repaying debts twice every week to lower the debt burden.
To counter the problem of accruing interest rate, make payment as soon as you have enough budget to repay the loans. If you are bad at saving money, paying the interest twice a month will help you repay as soon as you earn some money. Moreover, the close-by dates of loan repayment will keep you active to earn every now and then.
Making repayments twice a week can lower the incurring rate as well. You will save your money that would have been spent on 15 extra days of non-repayment. For example, if the accruing interest on your loan of $500 for a month is $50. If you will pay $250 by 15th of the month, it will lower the interest rate to $25 on the remaining amount of $250.
Utilize Credit Card Rewards for Debt Repayment
It is imperative to build credit for every college student because a strong credit history is necessary to borrow money for a house, a car, or other loans. Specially designed credit cards for students have low fees, bonuses for good grades, and cashback offer on the purchases you make.
During your college enrollment period, build cash back and other points to use them for loan payments. It helps in payment of loans without you paying the money and in the establishment of credit.
Remember to prevent getting into a credit card debt and use it in a responsible manner. Pay your balance at the end of each month.
Taylor Hill works for a financial technology company Stilt located in San Francisco which is revolutionizing the way individuals with limited or zero credit history get loans in the USA.