Paying off student loans is a slog, and for many can feel like a never-ending financial black hole. While Congress doesn’t seem bothered by our collective $1.6 trillion (and ever growing) debt, and any possible relief seems a long way off, there are small things you can do to lessen your loan load.
These won’t be a cure-all for your financial woes, but they’ll help you get your loan payments in order.
Focus on One Loan at a Time
In order to conquer your student loan debt, you need a plan. List out all of your debts, public and private, and their corresponding interest rates. Then decide if you want to tackle them via the snowball method, which means paying off the smallest balances first, or the avalanche method, which is paying off the debt with the highest interest rate first. To maximize your savings, you’d want to prioritize the loan with the highest interest rate, though some people find it more helpful to tackle the smallest loan, and then second smallest, and so on.
Set Up Auto Payments
Yes, this will ensure that all of your payments are on-time so you won’t get hit with late fees or penalties, but in some cases it could also mean s 0.25 to 0.50 percent reduction in your interest rate, depending on your lender.
Pay (Slightly) More Than the Minimum
You need to pay at least the minimum amount due each month so as not to fall into default, but if you can pay more than that—even $10 or $20 more—that could significantly reduce the amount of time you’re paying off your loan. If you can’t do that at first, pay the minimum until you’re comfortable, and then slowly increase your payments each month on the loan you’ve decided to pay off first.
Request That the Extra Go Toward Your Principal
When you pay more than the minimum and you have no other fees to pay, you can request that the extra be applied to the principal rather than the interest. This helps in two ways: One, it lowers your balance overall, and two, it lowers your future interest payments.
Servicers are tricky, and you’ll need to continuously check in with them to make sure they’re applying your payments in the way that you want them to. And you want to make sure you request that it goes to the debt you’re prioritizing to really make a difference—otherwise, the servicer will spread it among your loans and it won’t make a discernible dent in what you owe.
