The cost of your student loans has more than likely put you into a reasonable amount of debt. The kind of debt that can be hard, or impossible, to pay. The great thing is that the federal government has chosen to extend the date out even further for the time when the repayments will go back into effect.
It also allows us to have a few more months where we are not getting charged the high rate of interest that they came with. That is something that we must all take advantage of. There are a couple of ways that we can use this to our advantage, so let’s take a look at them in a little more depth.
Make Some Payments
If you have looked at your loans lately you have seen that along with waving the payments, for now, they have stopped charging interest on them. Those exceedingly high-interest rates have been increasing the amount of your monthly payment. Because of that, you should be making your regular payments still.
If you have been continuing to make your payments your principal amount will have gone down. When they do start charging interest the totals that they use to multiply their interest rates will have gone down. This means that you will not have as high of a dollar amount of interest attached to your principal amount.
Take Out a Refinance Loan
You need to analyze your specific situation with this option, because it may not be the correct move for you to make. Student loan refinance rates are at an all-time low so if you have good credit, have become more stable with your financial position, and have not had any negative movements in the direction that your life is headed, then getting a better rate is a great option.
If you answered “no” to any of these questions you will need to look into the matter further. The problem with having any negative marks or turn of events is that the lender may look at you as a higher risk than what you were in the first place. Higher risk means higher rates.
Once you get a refinance you cannot ever turn back, which means that you will no longer have any benefits that go along with having a loan through a government-backed lender. No extensions, no interest-free months, and definitely no way to adjust your payments to match your income.
Make Some Extra Payments
None of us like to give out money that we do not have to, not on bills anyway. But if you think about it this way; The more money that you pay this month is less that you will have to pay next month. When you make extra payments on your student loans you will be paying more on the principle of the loan, which in turn decreases the amount that you owe.
The faster that you pay this loan down, the faster you will be out from under the debt. Once you reach this level you will have more money going into your pockets and less going to bills. So, pay extra now to save money later.
These are the 3 biggest tips that we can give you to help lower your student loan debts this year. Even when the government decides to go back to normal with the loans, meaning back to charging interest and sending monthly bills, you can consider moving forward on the last two tips. Especially paying more than what the minimum amounts are because you are better off paying them down as fast as possible to get yourself out from under the high-interest rates and the large debt that the loans have put you into.
Aidan has been writing about personal finance for over 6 years. Prior to this, he worked as a Corporate Finance Analyst where he specialized in Due Diligence, Company Valuations and more. He is a CFA charterholder.
