If you’re saddled with both a degree and thousands of dollars of student debt, you’re not alone. More than 70% of Millennial college graduates leave college facing prospects of repaying more than $35,000 in student loans, a feat that can take well over a decade to eliminate. Though it may seem daunting, the financial experts at Alpine Bank recommend the following to repay student loans with minimal stress and maximum efficiency:
- Choose your loans wisely: Calculate the cost of the necessities – tuition, room and board, textbooks, and transportation – and sign loans that cover only what you need, even if you qualify for more. A part-time job or summer position can provide funds for added nonessential expenses. Your loan might allow you to defer interest payments while you’re still in school. However, unless it’s subsidized, it will accrue interest immediately. Unpaid interest then compounds and adds to the principal, creating an even larger amount to repay. When possible, apply income from a part-time job to pay back a loan’s interest while you’re still in school to save hundreds on repayment when you graduate.
- Increase your payments: If you’re on a 10-year installment plan, you’re paying a decade of interest on top of your original loan, adding more debt to your plate. When possible, pay back more than the minimum agreement each month and chop off extra time and interest. If you have multiple loans, direct your additional payments towards the loan with the highest interest rate. The faster you can pare down the principal, the less you accrue in exorbitant interest.
- Make installments as often as you are able: With less time between payments for interest to accumulate, an accelerated payment plan can decrease your repayment term. By doubling your schedule of installments and making more payments over the same time period, you’re able to lessen the interest and pay your loan off sooner.
- Track your interest: Motivate yourself with a continually updated track record of your current interest. The longer you have the loan, the more money you spend towards interest. Incentivize yourself by creating a cap for how much you want to pay in interest. Let that help guide you to make extra payments per year.
Our loan officers at Alpine Bank are here to help you not only secure the funds you need, but manage them as effectively as possible. Let us know how we can help you navigate your student loans today!