How do you repay student loans without stress? Student loans are very useful, especially if you’re going for higher studies at a superb college or university. The US has a very liberal student loan system: there are Federal loans and those from private lenders. You can avail of either of these depending on your need to finance higher education. But how do you repay student loans in a way that doesn’t affect your financial future?
To give you glimpses into the popularity of student loans in the US, here’re some facts and figures.
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Facts & Figures of Student Loans
Figures for 2023 indicate, 42.7 million borrowers have a total student loan debt of $1.7 trillion. This staggering amount implies each borrower owes $37.088 in student loans to banks, credit unions, and other lenders.
The Federal loan owed per borrower is comparatively low at $19,281 for that year. Figures for 2024 were under compilation at the time of penning this article. Over 90 percent of all American students take Federal loans for their higher studies, statistics reveal. With such high numbers, it is important to ask: how do you repay student loans efficiently?
Statistics reveal, that approximately 38 percent of first-time, full-time undergraduate students in the United States received student loans. This percentage varies by institution type, with about 37 percent of students at public four-year institutions and 67 percent of students at private for-profit four-year institutions having student loans. This makes it crucial to plan ahead and find ways to repay student loans effectively.
Best Ways to Repay Student Loan
The above figures reveal that most students in the US graduate with debt burden due to student loans. The amounts can vary for each individual but debt of all types has to be repaid on time and at the earliest.
There’re several flipsides of delaying repayment of student debts, which I will highlight later in this article. Understanding how do you repay student loans faster can help avoid these financial setbacks.
Five Proven Ways on How do you Repay Student Loans Faster
Debt Consolidation
Debt consolidation is the best way to repay student loans quickly. This means, you take a personal loan on easier terms and conditions from any lender such as a bank or credit union, among others, and repay student debt along with any others you might have.
That way, you’ll focus on repaying a single loan and lose less money using interest or Annual Percentage Rate. Therefore, when you graduate, consider repaying student loans using the debt consolidation method. If you're wondering how do you repay student loans efficiently, this method can be a smart option.
- Also Read:
- 8 ways to pay for college without loans
- How to Improve Credit Score as a Student – Grow faster, Be Smarter!!
Step Up Payments
Should you wish to avoid taking another loan for debt consolidation, the other best thing to do is to step up payments. That can be done if you draw a good budget and curb your expenses a bit. By doing so, you can add the money you’re saving to the student loan amount and hasten its repayment fully on or before schedule.
As a student, if it’s possible to work on or off campus and make money, that amount could also be utilized for stepping up payments of student loans. So, how do you repay student loans early? Increasing payments gradually is one of the simplest ways.
Register for Autopay
When you enroll for autopay of your student loan, the lenders usually offer some discounts on the APR. That way, you can repay the slightly lower installments on time and avoid penalties. You save some money and that could be well used to step up repayments where possible.
Generally, all student loan lenders allow autopay. Find out the benefits you could get by using this system and if beneficial, use it. However, autopay calls for strict financial discipline. This is one more way to answer the question: how do you repay student loans without unnecessary stress?
Biweekly Payments
Instead of repaying for student loan once every month, do so every fortnight. That way, you’ll be paying double the amount and speeding up its settlement before schedule. At the same time, consider the savings component too. Some lenders will not waive any APR even if you repay before schedule.
In such situations, it’s not advisable to go for biweekly payments. However, if you can negotiate and get superb rates for repaying twice a month, grab the opportunity and repay the student loan quicker. If you’re searching for how do you repay student loans early, biweekly payments can be a great way to reduce your loan balance faster.
Pay Off Interest Before It Capitalizes
If you have unsubsidized loans, pay the interest while you're still in school to prevent it from being added to your principal balance. To do so, you’ll require astute financial discipline and, in some cases, help from parents.
That way you can repay the interest component of the student debt in advance and even if the principal amount gets carried over, it would be a smaller amount to repay.
Discuss this with the bank credit union or other lenders from where you’ve taken the student loan. This strategy can help answer how do you repay student loans faster with minimum extra cost.
You could use any of these five ways to repay your student loan early. I strongly suggest using these methods because leaving college and university under the burden of student debt can cripple your future in ways you’ve never known.
Evil Impact of Unpaid Student Loans
You might wonder what’s the negative or evil impact of having unpaid student loans. The answer is obvious: it can mire your life in various uncertainties. This makes it even more important to ask—how do you repay student loans on time and avoid financial troubles? Here’s some of the real impacts of unpaid student debt.
- Loss of Career
Often, fresh graduates with student loans tend to settle for jobs that pay less than their worth. They take such jobs to get the much-needed money for repaying student loans and any other debt. As a result of such choices, your entire career might suffer. Avoiding this requires careful planning on how do you repay student loans without compromising your career.
- Delays in Homeownership
With credit scores taking a body blow, homeownership is usually delayed for graduates that’ve large unpaid student debt. One of the first impacts of delays or defaults in student loans is the damage to credit scores. This means you might not be able to get much mortgage and even if you do, it could come at very high interest rates. This is why knowing how to repay student loans is crucial for long-term financial stability.
- Delays in Marriage
Your marriage could get delayed due to unpaid student loans. This is said to occur due to delays in homeownership caused by poor credit scores. While the US has a high divorce rate, your first marriage might have to be much later than you had planned. Also, money issues are one of the biggest causes of divorces across the US.
Surely, you would love to avoid such situations since they’re mentally painful and also, financially expensive. A delayed marriage also comes with delayed parenthood, if you wish to have kids. This affects only men though. Having a repayment plan is essential when considering how to repay student loans without impacting major life goals.
As you might have seen, there’re several flipsides to delaying payment of student loans. Some studies claim it sets back a graduate’s life by as many as seven years. Furthermore, persons with student loans also suffer from emotional stress leading to poor physical health.
They’re more prone to brooding and developing negative traits, over a while. Overall debt and its ensuing anxiety are known as one of the main causes for alcohol and drug addictions.
In Conclusion
Therefore, if you’re a student or a fresh graduate, I suggest you comprehend the importance of this article and everything I’ve mentioned. The fact that student debt can be crippling is now known to Federal authorities that’re trying to find ways and means to alleviate or soften the blow it has on American students. Most delays in payments of student loans occur due to sheer carelessness.
You might be tempted to spend money on other things, imagining they’re a priority. However, neglecting student loans, though serious, doesn’t come with severe penalties. This leads to callousness and default or delayed payments. Use any of the above methods to clear your student loan. So, how do you repay student loans wisely? Follow these strategies and take charge of your financial future today!
Ashwin (Win) Honawar is an accomplished journalist and poignant author with 33 years of experience. He is renowned for his daredevil journalism and engaging narratives that explore various facts of human life and the resilience of the human spirit.
