Paying back a student loan is rather daunting. Whether you had one, three or five years of university, it’s likely there’s a hefty sum hanging over your back.
But what if it didn’t have to be that way? What if you could pay it off faster? It may sound like a fever dream, but it’s possible. Millions of students across the globe hold thousands and thousands in debt, so don’t be one of them!
- Pay more each month
I promise, this is the only really obvious answer here! It’s obvious, but true, and paying more each month will help you shorten your term length. If it’s the act of obtaining more money that’s the problem, then you have two options; earn more or spend less!
Cutting down on luxuries can save around £30 a month, which can go straight to your payment plan. Or, look for a part-time job on top of your full-time job, or sell some of your belongings. Think thrifty thoughts!
- Apply for a larger loan to cover the cost
This only works if your student loan is quite small, but it’s a good way to get rid of it quickly. Student loans come with interest attached, and the rate can vary. So, to avoid paying a potentially high interest rate, I’d apply for a loan with a lower interest rate.
You would then use this loan to pay off your entire student debt. This way, you’re still paying something monthly, but you’ll be paying less because the interest rate is less. There are plenty of loans that are easy to obtain for students who may have little or bad credit, like online secured loans. Read the T’s and C’s carefully, and make sure you apply for a manageable amount.
- Change to fortnightly payments
Traditionally, student loans are paid back in monthly instalments. This is usually fine, but there’s significant evidence that proves fortnightly payments are better. That’s assuming you’re allowed to switch, anyway.
When you pay a loan instalment, you must pay off the interest that has accrued since your last instalment. In monthly payments, this is 28-30 days, but in fortnightly payments, this is 14 days. There’s less time for interest to build up, so there’s less interest!
Secondly, paying bi-weekly means you make 26 payments a year, which is more than paying monthly. Paying every two weeks is also easier to manage, as you’ll be paying smaller sums. For example, you may have to pay £60 a month, but bi-weekly it would be less than half that.
- Ask for money as a gift
And lastly, it’s time to get a little cheeky. Or is it technically cheeky to ask for a specific birthday gift? Who knows. The point is, asking your parents to give you £20 for your birthday instead of that fragrance kit (again) is wise.
You can also do the same with your friends, family and anyone who else who usually buys you stuff. Think about all the useless junk you get for Christmas and your birthday. Translate that into cash value and that’s how much more you could slam toward your student loan each year.
Another benefit to this is that you don’t miss out. You can still carry on living your life as you wish, and other people will effectively pay your loan for you. Clever is the word of the day!