Student loan debt can affect your outlook on life more than other types of debt. Learn how to pay, fast. (iStock)
Consumer debt is a major source of stress for millions of Americans, and recent research suggests that student loans may cause more anxiety than other types of debt.
A recent study by a team at Bocconi University explored the relationship between the types of debt people have and their overall satisfaction in life, assessing people’s attitudes towards mortgage, credit card and student loans.
The study focused on more than 5,800 American adults, comparing the type and amount of debt they owed with life satisfaction. It concluded that student loans are considered a heavier burden than other types of debt.
If you are also overwhelmed with student loans, you must devise a plan to reduce your debt.
How can I decrease my student loan debt?
Since student loans can have a significant impact on your emotional well-being, you shouldn’t be late. Here are three strategies to help you ease the burden of student loan debt:
- Refinance student loans
- Make extra payments if you can
- Follow the standard refund plan
1. Refinance student loans
If you have multiple student loans, refinancing can:
- Consolidate them into a private loan
- Shorten loan term
- Save money on interest
The average refinancing rate for student loans for a 10-year fixed rate loan is 3.89%, with a 5-year variable rate loan averaging 3.26%. These rates are at a record high, making this 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 calculator. You’ll get an estimate of your 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 from multiple lenders at the same time, without affecting your score.
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Refinancing may not be your best option for federal loans, as they come with low interest rates, grace periods and loan forgiveness. However, you can save thousands of dollars by refinancing private student loans, especially if you have a solid credit score and stable income.
2. Make extra payments if you can
Student loan lenders do not penalize you for making additional payments on the balance of your federal or private loan. You can reduce the principal and shorten the duration of your student loan:
- Make extra payments throughout the month
- Pay more than the minimum on the due date
Before making extra payments, contact your loan manager to ensure they are applied correctly.
If you don’t specify that you would like the payment to go to your principal, they can apply it to their next month’s invoice, which will not speed up your repayment plan. Whether you have an extra $ 20 or $ 2,000, applying it to the next student loan payment is a smart move with lasting effects.
If you have private loans or ineligible federal loans, take the time to research and compare refinancing lenders to see if you can save.
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3. Follow the standard refund plan
The standard repayment plan for federal student loans is 10 years, with monthly payments based on that schedule.
Federal loans come with generous repayment plans that reduce your monthly payments, extending the duration of the loan. If you’re struggling financially and struggling to keep up with payments, these income-based plans can save your life.
However, they can substantially lengthen the term of your loan, adding years to your plan and potentially increasing the interest you pay over time. These payment plans are not always worthwhile, leaving you overwhelmed with student loan debt for longer than necessary.
If you really want to pay off your education loan as soon as possible and can afford monthly payments, follow the standard repayment plan.
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The final result
Paying off your school loans can be incredibly liberating, allowing you to pursue your interests without fumbling with student debt. With the above strategies, you can cancel your student loans quickly.
If you have federal student loans, try to follow the standard repayment plan. Adjust the loan term only if absolutely necessary and make extra payments whenever possible.
If your student loans are private, refinancing may be your best bet. You can save time and money on your student loan repayment plan by managing all of your loans in one place. Take a few minutes to use an online tool like Credible to compare student loan refinancing rates from multiple lenders at the same time, without reducing your credit score.
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