Student loans are meant to help those who want to study and don’t have adequate financing. There’s no doubt that many of us have benefited and continue to benefit from such loans. But how long should it take you to pay off your student loan?
It is clear that no one would like to stay in debt for long. While you may have a longer period to repay your student loan, it is a good idea to clear it as soon as you can.
There are a host of benefits to repaying your student loans early. The most obvious benefit is that doing so will relieve the pressure of loans and help you plan your financial future. Additionally, paying off your student loan early means that you won’t be penalized or charged more interest on the loan. If you want to avoid debt long after university, follow these expert tips to pay off your student loan on time.
1. Create a budget and stick to it
Budgeting is an essential skill for anyone who wants to properly manage their finances. According to financial experts, budgeting imposes a certain level of financial discipline on people. Lack of proper budgeting is one of the things that can prevent you from paying off your student loans fast. It can also hinder you from achieving your future financial goals.
As a student, it is advisable to conduct an assessment of your spending habits and create a budget that takes into account all your bills and financial obligations. This will ensure that a certain amount of money goes towards repaying your student loan each month.
2. Pay more than the premium
The reason why many students lag behind in repaying their loans is that they stick to only the minimum payment. It is not a must for you to stick to the minimum amount of loan installment to be repaid every month. Sticking to the minimum means you will take a much longer time to pay off the student loan.
If you are determined to repay your student loans faster, then the best option is to increase the monthly installments above the minimum requirement. This means adjusting your budget in a way that will help you divert more money towards the repayment of your student loan. Within a few months, you will notice a great significance in terms of principal reduction.
3. Start repaying while you are still studying
This is another great way of paying off your student loan on time. It doesn’t matter how little you can start with, just get started. It is true that making money while still in college is not easy but it is possible.
You can take on a part-time job and commit a certain percentage of your income to pay off your loan. Waiting until you get out of the university may seem convenient but can negatively affect your future financial goals.
To help you pay off your loan early, the SRLF doesn’t charge any interest during your agreed period of study and also allows you to pay whatever you can during this period. So take advantage!
4. Create a special account for loan repayment
Creating a special/separate account specifically for loan repayment will make your budgeting work better. It is always easy to give priority to other immediate expenses and forget about loan repayment. The best way to avoid this common problem is to open a separate account whose sole purpose will be to pay off your student loan.
It won’t take much of your time to open a new bank account dedicated to loan repayment. All you need to do is follow a strict budget and ensure that all the money that goes into that account is used to repay your student loan.
5. Make extra payments when you can
When possible, make extra payments to reduce the principal much faster and minimize the repayment time. By reducing the principal amount of the loan, you are actually reducing the loan term as well as the interest accrued.
At first glance, paying off your student loans on time may seem like a tall order. But it is doable if you discipline yourself and follow these expert tips. Besides, it comes with many benefits, the greatest being the peace of mind knowing your loan is paid off and you can focus on other financial goals for your future.