Graduating from college is a great feeling. The world is full of opportunities and ways to put your imprint on the world. There's one minor problem. You likely had to take out student loans to finance your time in school. The average 2016 graduate leaves school with over $37,000 in student loans – making it a challenge to know how to best begin to pay them off. All is not lost. There are ways to attack your student loans. If you want to jumpstart student loan payments once your deferment period is up, here are four ways to hit the ground running.
Make Your Employer Pay Them Off
One of the more unique ways to jumpstart student loan payments is through your employer. While admittedly small in number, some employers offer student loan repayment as a perk to employees. The Society of Human Resources Management reports that three percent of employers currently offer this perk – though it's becoming increasingly popular.
Before you think this option provides free money to repay student loans, know there are some catches. Unlike a 401(k) match, the funds you receive are not tax-free; they're taxable at year-end. The employer may also cap the amount they give out. Lastly, it may make sense to simply ask for higher pay and not assistance in some cases. Regardless, if you want a way to jumpstart student loan payments, this may be a good option to pursue.
Make Extra Payments
Making extra payments on your student loans may feel like a challenge, especially on a lower income. But, with a little creativity, you can make extra payments and further knock down your student loan debt. This can be done relatively simply through asking your lender to allow you to make bi-weekly payments instead of monthly payments. By using bi-weekly payments, you end up making one extra monthly payment over the course of the year. It may not seem like much, but it can knock more than two years off a debt of $40,000.
Check with your lender to see if they allow this option and set it up on auto-pay to make payments every two weeks. Whenever you come into extra money, through a bonus, gift, or other unexpected income, you can also apply that towards your loans.
Consolidate or Refinance Your Student Loans
Consolidating your student loans allows you to do one thing – combine all of your loan payments into one payment. There are several benefits to this option:
- You have only one payment to manage each month
- You may be able to lower your interest rate
- You only have one lender to deal with
The potential result is jumpstarting payments on your student loans and paying them off quicker. Just make sure you don't lose out on valuable protections in some cases – especially on Perkins loans. However, if you'd like to pursue consolidating or refinancing your student loans, check out rates on LendingTree.
Start a Budget
Sometimes the best way to jumpstart student loan payments is the most traditional – living by a budget. Budgets are viewed by many as restrictive, but in reality they give you freedom to spend in a way that supports your goals.
Starting a budget allows you to identify areas to save money to apply towards your student loans. If you pair that with extra money to throw at your student loans, you can attack your loans more efficiently.
Jumpstart Student Loan Payments to Achieve Success
Student loans can be overwhelming. You may feel like you'll never get out from under them. Don't allow that feeling hold you back or lead to inaction. There are ways to jumpstart student loan payments that will help you pay them off and become debt free quicker. The extra you're able to do in the beginning may feel insignificant, but don't let that hold you back from starting. Rather, use those small payments as a way to motivate your long-term success.
The Bottom Line
Being a new graduate is a great time of life. Use your deferment period to find the best way to jumpstart student loan payments and hit the ground running the moment that period ends.