Student loan 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.
A recent study by a team at Bocconi University examined the relationship between the types of debt people have and their overall life satisfaction, assessing people’s attitudes toward mortgage, credit card, and student loans.
The survey focused on more than 5,800 American adults, comparing the type and amount of debt they had with their life satisfaction. It concluded that student loans are perceived as a heavier burden than other types of debt.
If you also suffer from student loans, you’ll want to come up with 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, don’t delay paying them off. Here are three strategies to help you ease the burden of student loans:
- Refinance Student Loans
- Pay extra if possible
- Follow the standard amortization plan
1. Refinance student loans
If you have multiple student loans, refinancing can:
- Consolidate them into one private loan
- Shorten the term of the loan
- Save money on interest
The average student loan refinance rate for a 10-year fixed-rate loan is 3.89%, with a 5-year variable-rate loan averaging 3.26%. These rates are low, making this a great time to refinance private student loans.
The best way to determine the rates you qualify for is to use an online student loan refinance calculator. 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 student loan refinancing rates of multiple lenders at once without affecting your score.
JOE BIDEN’S STUDENT LOAN PLAN: 5 CHANGES YOU MAY SEE
Refinancing may not be the best option for federal loans, as they come with low interest rates, deferred payments, and loan forgiveness. However, you can save thousands of dollars by refinancing private student loans, especially if you have a solid credit score and income.
2. Pay extra if possible
Student loan lenders do not penalize you for making additional payments on your federal or private student loan. You can reduce the principal and shorten the term of your student loan by:
- Make additional payments during the month
- Pay more than the minimum on the due date
Before making additional payments, check with your loan servicer to ensure they are being applied properly.
If you don’t specify that you want the payment to go to your principal, they can apply it to the next month’s bill, which won’t speed up your amortization plan. Whether you have an extra $ 20 or $ 2,000, spending on your next student loan is a smart move with lasting effects.
If you have private loans or ineligible federal loans, take the time to shop around and compare the refinancing providers to see if you can save.
HOW TO CHOOSE THE BEST STUDENT LOAN CONDITIONS FOR REFINANCING
3. Follow the standard repayment schedule
The standard federal student loan repayment plan is 10 years, with monthly payments based on that timeline.
Federal loans come with generous repayment plans that reduce your monthly payments by extending the length of your loan. If you’re in financial straits and struggle to keep track of payments, these income-based plans can be a lifesaver.
However, they can significantly extend the life of your loan, add years to your plan, and potentially increase the interest you pay over time. These payment plans aren’t always worth it, leaving you struggling with student loan debt longer than necessary.
If you are serious about paying off your education loan as soon as possible and you can afford the monthly payments, stick to the standard repayment plan.
WILL BE STUDENT LOANS RETURNED IN 2021?
it comes down to
Paying off your school loans can be incredibly liberating, allowing you to pursue your interests without getting bogged down by student debt. With the above strategies, you can quickly turn off your student loans.
If you have federal student loans, try to stick to the standard repayment plan. Only adjust the term of your loan when absolutely necessary and make additional payments whenever you can.
If your student loans are private, refinancing may be the way to go. You can save money and time on your student loan repayment plan by managing all your loans in one place. Take a few minutes to use an online tool like Credible to compare student loan refinancing rates of multiple lenders at once without dropping your credit score.
HOW TO REFINANCE HIGH INTEREST STUDENT LOANS