First Federal Bank Blog

Student loans can be a heavy financial burden. However, there are a few simple tips to help you chip away at your debt faster. Here’s a look at a few strategies to help you set yourself on a quicker path toward financial freedom:

Go above the minimum payment
 
Making a bigger monthly payment may require sacrificing some of your disposable income, but it can provide a faster route to financial freedom. And since interest accrues over time, paying your debt off faster can help you keep more of your money in your pocket over the long run.
 
NerdWallet contributor Ryan Lane sums it up with a simple example — if you have a $10,000 loan with a 10-year repayment plan and an interest rate of 4.5%, you can pay off that loan five and a half years faster by adding an extra $100 to your monthly payment. Even if you don’t have $100 to spare every month, even a relatively small investment in your monthly payment can net big savings in interest over time.
 
For a more customized look at how much you could save, search online for a student loan payoff calculator. It can crunch your real-life student loan numbers and show you how much you could save — and how quickly you could be free from your loan.
 
Consider refinancing
 
Have a good job and steady income? Lane explains you may be able to get a lower interest rate or shorter loan term by refinancing. Depending on your refinancing options, you may have a higher monthly payment due to a reduced term length, but the lower interest rate will result in saving thousands of dollars. In order to be a good candidate for refinancing your loan, Lane suggests having a reliable source of income, a debt-to-income ratio below 50%, and a credit score in the high 600s or better.
 
The benefits of automatic payments
 
If you have trouble remembering to make your student loan payment on time, you may be able to pay down your loan faster with automatic monthly payments. Signing up for automatic debit will ensure you make your payments on schedule and in full, including any extra money you want to apply to the balance. On top of that, StudentAid.gov explains some lenders offer a 0.25% interest rate discount for setting up automatic withdrawals. Contact your loan provider to see if you can score an interest rate reduction for setting up automatically debited payments.
 
Talk to your employer
 
Depending on your line of work, you may qualify for a student loan forgiveness or repayment program. According to StudentAid.gov, members of the U.S. Armed Forces, teachers, and public servants may qualify for exclusive loan repayment options, as long as certain criteria are met. For instance, the Teacher Loan Forgiveness program offers $17,500 for applicants who have taught full-time for five complete, consecutive years in underserved communities.
 
Need help managing your student loans? Consider speaking with a financial advisor and your loan services for options tailored to your needs.