Student credit debt can affect your outlook on life more than other types of debt. Learn how to pay it off quickly. (iStock)
Consumer debt is a major source of stress for millions of Americans and recent research suggests that student loans can cause more anxiety than other types of debt.
In a recent study by a team from Bocconi University, the relationship between the types of debt people have and their overall satisfaction in life was investigated.
The study focused on more than 5,800 American adults, and compared the type and amount of debt they had compared to their life satisfaction. The conclusion is that student loans are considered a heavier burden than other types of debt.
If you are also taxed on student loans, you want to devise a plan to reduce your debt.
How can I reduce my student loan debt?
Since student loans can have a significant impact on your emotional well-being, do not procrastinate. Here are three strategies to alleviate the burden of student loan debt:
- Refinance student loans
- Make extra payments if you can
- Follow the standard repayment schedule
1. Refinance student loans
If you have multiple student loans, refinancing can:
- Consolidate this into a private loan
- Shorten the loan term
- Save money on interest
The average refinancing rate for student loans for a fixed-rate loan for ten years is 3.89%, with a 5-year loan with a variable rate of 3.26% on average. These rates are at a low record, which is a great time to refinance private student loans.
The best way to determine the rates you are eligible for is to use an online student loan refinancing computer. You get an estimate of the monthly payments and see how much you can save over time. You can also use an online tool like Credible to compare the refinancing rates for student loans from multiple lenders at the same time without affecting your score.
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Refinancing may not be the best option for federal loans, as it comes with low interest rates, grace periods and forgiveness for loans. However, you can save thousands of dollars by refinancing private student loans, especially if you have a good credit score and a steady income.
2. Make extra payments if you can
Student loan lenders do not penalize you for making additional payments on your federal or private student loan balance. You can reduce the principal and shorten the duration of your study loan by:
- Extra payments during the month
- Pay more than the minimum due date
Before making any additional payments, contact your lender to make sure they are being applied properly.
If you do not specify that you want to pay to your principal, they can apply it to the next monthly bill, which will not speed up your repayment plan. Whether you have an extra $ 20 or $ 2,000, it’s a smart move with lasting consequences, to pay it off for your next student loan.
If you have private loans or unqualified federal loans, take the time to look around and compare refinancing loans to see if you can save.
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3. Follow the standard repayment schedule
The standard repayment schedule for federal student loans is ten years, with monthly payments based on the timeline.
Federal loans have large repayment plans that reduce your monthly payments by extending the length of your loan. If you are experiencing financial difficulties and struggling to keep up with the payments, these income-based plans can be a lifesaver.
However, it can significantly extend the term of your loan, which can add years to your plan and potentially increase the interest you pay over time. These payment plans are not always worth it, and it leaves you with more time than you need by weighing your student loan debt.
If you are serious about repaying your education loan as soon as possible and can afford the monthly payments, stick to the standard repayment schedule.
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The conclusion
If you pay off your school loans, it can be incredibly liberated, so that you can pursue your interests without being caught by student debt. With the strategies above, you can quickly eliminate your student loans.
If you have federal student loans, try to stick to the standard repayment plan. Only adjust your loan term if absolutely necessary and make extra payments whenever you can.
If your student loans are private, refinancing may be the best option. You can save money and time on your student loan repayment plan and manage all your loans in one place. Take a few minutes to use an online tool like Credible to simultaneously compare the refinancing rates for student loans from multiple lenders without lowering your credit score.
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