The majority of students in America have to borrow money in order to attend college. According to statistics from Chronicle of Higher Education, approximately 12 million Americans incur college debt annually.
Thus creates the double-edged sword of attending college: Get a degree to create a better financial future and go into debt in order to do so.
So, for 60 percent of the students who attend college each year in America, incurring debt is the price they pay. Once that college debt is incurred, the question becomes this: How to pay off student loans?
No one wants to struggle to pay off student loans for the rest of their life. That’s why it is so important for students to formulate the best game plan in order to eliminate college debt.
These are some of the best ways to pay off student loans:
Although it might be a little scary to commit to it, setting up an auto draft payment should be at the top of any college loan repayment plan. Knowing how to pay off student loans will save you headaches and money.
Lenders will often lower your loan interest rate if you establish an auto payment plan. An auto draft plan also ensures that you can budget for this payment. This will allow you to take care of your student loan each month in a timely manner, which will improve your credit and keep your interest rate as low as possible.
Variable rates can be dangerous
Many private student loans are of a variable interest rate nature. These rates are usually lower than fixed rate loans, but they may not stay that way for long.
When considering how to pay off student loans, those with variable rates should be addressed first. This will allow you to avoid the chance of escalating interest rates that will increase your monthly payment and strain your budget.
Pay more than your minimum payment
You read that right! When planning on how to pay off student loans, paying more than you are required to each month helps to reduce your total loan amount.
There may obviously be times when making more than the minimum student loan payment is not an option. When possible, though, paying more than the minimum lets you put the additional amount towards reducing the loan principal.
This means that your student loan debt will shrink at a quicker rate, which will help you envision a debt-free future.
Let Uncle Sam give you a tax break
Although “income tax” is often thought of as a four-letter word, April 15 can be a happy time when determining how to pay off student loans. Depending on your annual income, you can receive beneficial tax deductions from your student loans.
Up to $2,500 can be deducted from your student loan interest each year, which can go a long way in the amount of money you receive in your tax refund.
When looking at how to pay off student loans, this tax refund from your loan interest paid can be used towards your loans. Sure, you may want to use your tax refund to take a vacation or get that 60-inch flat screen TV, but in the long run it would be better to use it towards paying off your student loans.
CommonBond.co can show you how to pay off student loans as pain-free as possible.