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Personal Finance
5 Ways to Pay Off Student Debt Faster
Nearly 43 million Americans are in student loan debt, owing nearly $1.6 trillion combined.
But with these approachable strategies, managing your student loans doesn’t have to feel stressful. From automatic transfers to smart budgeting, Origin Bank helps you take the right steps to financial freedom.
Ready to make progress on your student loans?
A 5-step plan for fast student loan progress
- See if you qualify for loan forgiveness. First things first – check to see if you qualify for student loan forgiveness or more lenient repayment plans. According to StudentAid.gov, you can have your student loan balance forgiven or enroll in a special repayment plan if you’re a teacher, public servant, veteran, or a member of another special group. Think you might qualify? Explore this list of ways the government can help you repay your loans.
- Avoid lifestyle inflation. After you get your first job and have some money in the bank, it’s tempting to start spending. But if you want to repay your loans as quickly and effectively as possible, don’t let your lifestyle catch up with your paycheck just yet. Continue to live as frugally as possible and put any extra income towards paying off your debt. With a college student’s budget and a full-time job, you’re bound to pay down the debt quickly.
- Get ahead of interest with the avalanche method. To start the avalanche method, identify which of your loans has the highest interest rate. Focus on paying that one off first. Then rinse and repeat: add the money you were already paying to the payment on your next highest loan. By knocking out larger loans completely, you’ll ultimately save money on interest. Just make sure you’re still paying the minimum amount across all other loans in the meantime.
- Turn on autopay. Did you know that when you sign up for autopay, you can reduce your interest rate by 0.25%? This service allows your student loan servicer to auto-debit your monthly student loan payment, ensuring you always make your payments on time. If you decide to enroll, experts recommend keeping at least 1-2 months' worth of payments in your account at all times.
- Make sure you’re still saving. While it might be tempting to spend every spare penny paying off your loans, this practice can leave you without a safety net. So before you decide how much to pay, take a look at the loan interest rate. If it’s low (less than 5% or so), you can take repayment more slowly without the added interest snowballing too quickly. However, this is only a smart strategy if you roll those extra funds over into a savings or money market account. This will help interest work in your favor, ensuring you don’t miss out on key early investment opportunities.
Turn your payoff plan into progress
Already focused on paying down student debt? Understanding your options can help you feel more in control of your financial future. For more financial tips from Origin’s team of trusted advisors, please visit our blog.