Not everyone can afford to fund their own higher education or has parents who are able to cover the costs. Many students have no choice but to take out a student loan – a decision that usually sets them back tens of thousands of dollars. What’s worse, in many cases, you can’t rely on debt forgiveness. Forgiveness is not only very hard to get, but it also applies only to federal or Stafford loans. So the question is, how do you pay off your student loan if cancellation is unlikely?
Although there is no magic formula that will make your student loan disappear, there are ways that can help you pay off your loan. Some of them might require tough decisions or need a lot of effort, but ultimately they should make your financial situation more manageable.
Use the Grace Period Wisely
Student loans made easy are a norm these days. However, paying them off later is a much more challenging task. Fortunately, both the federal government and private lenders realize that covering installments the second you finish your degree is unrealistic. Because of that, they usually include a certain grace period in the contracts.
The grace period is the extent of time during which you don’t have to cover the monthly payments on your loan. The time frame varies wildly depending on who provided you with the student loan.
For federal loans, the grace period usually lasts about 6 months after you leave the educational institution. With private loans, however, it depends on the loan provider, so make sure to read the loan contracts carefully. Also, remember that private lenders tend to charge the interest even during your grace period and add it to the final sum.
No matter how long your grace period, you should use it to start paying off your student debt earlier. Although you’re not required to pay in that timeframe, every installment you cover is one payment less in the future. Besides that, you’ll have less interest to pay later on.
Alternatively, use the grace period to find the best job possible. The better your wage is, the more you can afford to pay.
Sell Your Unnecessary Valuables
Our homes are usually full of useless junk that doesn’t serve any purpose anymore. However, some of these items might hold significant value. Selling them can make paying off your student loan much easier.
For example, there is no point in storing your previous gaming PC in the basement. Due to the elevated prices of computer parts, it might be best to sell it and use the money to pay off a part of your student loan.
Similarly, if you live in a big city, you’re most likely using mass transport systems instead of your car. Depending on its age and model, the money you get from it might be enough to cover your student loan.
Don’t be afraid to ask your family if they have some valuable heirlooms they no longer need. It might turn out that your parents’ attic is full of dusty paintings everyone forgot about. Or your late grandfather was a firearms enthusiast and left his collection of guns as an inheritance. If your loved ones don’t approve of the sale, check the inheritance documents to see if any of these items belong directly to you.
Find Additional Work Opportunities
Even if you manage to find a well-paid and secure job, you should still think about other sources of income. After all, with more money in your pockets, you can manage bigger installments on your student loan and pay it off quicker.
First of all, look at the strengths you have. If you work as an accountant, it means your math skills are very well-developed. You can then use those skills in your free time and give private classes to middle or high school students. Depending on how much of your free time you’re willing to devote to these lessons, you could easily make hundreds of dollars per week.
Furthermore, there might be ways to make your hobbies profitable. For example, if you love painting, look for ways to earn money from your creations. Promote your art online and sell it to the highest bidder on your preferred auction sites. If possible, take paid commissions to further increase your gains. Every dollar you make here is a dollar that can be used to pay off your student loan.
Think About Consolidating or Refinancing Your Loans
It might be that your student loan is only one of many loans you had to take during your studies. Perhaps you had an accident and needed financial help to cover your medical bills. Maybe your home was damaged, and you had to repair it. No matter the cause, if you have multiple loans, consider either debt consolidation or refinancing.
Debt consolidation works by taking all of your various debts and combining them (federal student loans included) into one sum requiring only a single monthly installment. Although you’re not getting rid of your loans, this move might make things a bit easier for you.
Debt consolidation loans tend to have lower interest rates for their payments, meaning it’s easier to pay them off without ruining your budget. Moreover, they make paying significantly easier, as you no longer have to remember all of your different payments. However, it is likely that the end sum will be bigger than your separate loans combined, so think carefully before you apply for one.
Refinancing works a bit differently, although the end result is similar. Instead of consolidating your loans into one, you simply take a new loan and use it to pay off your existing ones. After that, you’re left with a single monthly payment for the refinancing loan.
Similar to the debt consolidation, the interest rate might be lower than those on your previous loans. However, refinancing loans usually require a good credit score, so getting it might not be easy.
Paying off student loans is a difficult task. Debt forgiveness is hard to get, and covering your monthly installments can be a struggle. Luckily, if you’re willing to put in the effort, you should be able to find ways to help you pay off your student loan faster than you would otherwise. Use your grace period to start covering your loan sooner.Find ways to make money on the side by selling some of your unused stuff, giving private lessons, or making your hobby profitable. Lastly, consider consolidating or refinancing your loans. Although these options have drawbacks, they might be exactly what you need to make your financial situation more manageable. Good luck!