Student loan debts are a nationwide scourge, affecting around 73% of students in the country. It’s not just how common they are that’s bothersome; it’s how expensive they are. Recent studies show that most graduating students from colleges leave with debts upwards of $40,000.
That’s a lot for anyone, talk less of someone who has just finished school. You have a lot of dreams to prepare and save for. Things like mortgages, marriage, and child-raising require a good amount of planning and saving to be carried out effectively. Saving on your student loan is an excellent way to free up cash for yourself.
But then, how do you really save on your student loans?
Be an early starter: Paying up your loans in time can help you save a good amount of money. While still in school, you’ll most likely not be charged interest on your student loans. You’re also given a 6-month interest-free period in which you’ll not be charged interest on your loans, too.
This means that any repayments you make within this period will contribute directly to reducing your principal – hence, reducing your payable interest and saving you money.
Consolidation: If you have multiple loans at varying rates, it’s probably ideal for you to consolidate them into one loan with a fixed interest rate. This can be very useful in helping you control and save on your loans.
Refinancing: Refinancing your loans is another option when dealing with numerous loans or even a single loan. Because most people have multiple loans, refinancing a loan and consolidating it go hand in hand. However, they are very different activities.
When you refinance your loan, your new lender buys your old debt from the previous lender. They then present you with another loan deal. The new deal should offer either a better payment structure or lower interest rates.
The real advantage to refinancing is that you can do it multiple times. You can always refinance your loans if you think you can get a better deal.
You can consult education loan finance companies like elfi.com to help with both refinancing and consolidating your loans.
Pay off debt using tax deductions and credits: If you have a federal loan, one of the advantages you’ll enjoy when you start your career is that you can deduct the amount you pay in interest from your income tax. Your yearly deductions can add up to $2,500, which can make a good dent in your student loan.
You can also qualify for a tax refund of up to $2,500 if you’re in school, a training program for your job, or have just recently graduated. The refund is usually for eligible education expenses, which means you can redirect them to paying your student loans.
Get a job that affords you forgiveness: If yours is a federal government loan, you can be eligible for loan forgiveness. This is especially so under the public service or teachers’ loan forgiveness programs.
You can have all or some of your student loan debt forgiven if you’ve worked at the organization for a number of years.