5 Tips on How To Pay Off Your Student Loans Fast

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Want to pay off student loans fast? Then follow these tips:

Bite the Bullet Now
Consolidate Carefully
Use OPM – Other People’s Money
Claim Hardship Status
Get Help From a National Ombudsman

1. Bite the Bullet Now

There are four main student loan repayment programs if you have federal student loans – and these four plans let you pay off your debts in as fast as 10 years, or as long as 30 years.

Caution: Don’t make the mistake of just picking the option that lets you pay the smallest monthly payment.

That may help your cash flow in the short term, but in the long run you’ll pay thousands more in finance charges. The best strategy: pay as much as you can possibly afford on your student loans. If you can’t swing the standard
repayment plan, which will allow you to pay off your student loans in a decade or less, at least make extra payments on top of your normal monthly payment. Even if you can only afford to throw an additional $25 or $50 a month on top of your regular payment, every little bit will help. Sending in “extra” payments is a short-term financial challenge, but if you go ahead and bite the bullet now, making sacrifices in the near-run, you’ll be much better off economically in the long haul.

2. Consolidate Carefully

Anyway with student loans receives lots of offers in the mail from lenders seeking to consolidate your student loans. If you do consolidate you loans, do so wisely. You’ll have to keep your private loans and federal loans separate; you can’t consolidate those two groups of loans. But be careful which loans you roll into one bigger loan. For instance, let’s say you took out federal Perkins loans while you were in school. In most cases, you wouldn’t want to combine a Perkins loans with other types of loans. The reason: Perkins loans have better “loan forgiveness” benefits for people who go into teaching, and you can lose those benefits if you consolidate them.

3. Use OPM – other people’s money

If you’ve been in the workforce for a few years, and you haven’t made a real dent in your student loans, get the government or your employer to pay off your college debts. The government’s Office of Personnel Management
(www.opm.gov) runs the Federal Student Loan Repayment Program. If you work for a govt. agency, they’ll pay off $10,000 per year worth of your student loans, up to $60,000. A private employer can do the same thing. Your boss
can pay your student loans as a benefit or a perk to retain you as a happy and loyal employee. Ask about this possible benefit during your next performance appraisal.

4. Claim hardship status

Most people don’t know that they can claim economic hardship status, based on their personal circumstances, and get their student loan payments greatly reduced – or maybe even eliminated. If you’ve had a string of bad luck, say you went through a divorce, got laid off, then had a car accident — all of which impacted your finances, you can qualify. Also, having a protracted hardship, such as a lengthy medical illness, the department of education may say it’s not worth it to make you pay off your loans – and they can cancel out your loan indebtedness. To start the process of claiming an economic hardship fill out a simple 2-page form called a Statement of Financial Status. Find it online at the Department of Education:

www.ed.gov/offices/OSFAP/DCS/forms/fs.pic.pdf

5. Get help from a national Ombudsman: www.ombudsman.ed.gov

This is the website for the Federal Student Aid Office of the Ombudsman. This agency’s role is to help you resolve difficulties you may have with you student lender or loan servicing company. If you have complaints about your lender or disputes you haven’t been able to settle, the Ombudsman will listen to your grievances, and if they’re justified, contact the lender on your behalf.

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5 Tips on How To Pay Off Your Student Loans Fast

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