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Tips to Pay Off Student Loans Quicker
It’s not a secret that tertiary education is a very expensive investment, especially if an individual studies in a private institution. And while few people can afford the monetary requirements of tertiary education, there are still a lot of individuals that attend and graduate from tertiary education. This is because of the aid of the government known as study aids or student loans.
Student loans are monetary aid given by the government to young students in order for them to finish tertiary school and hopefully find a job to repay the debt the student made. It might sound like a really sweet deal until you find out that there are yearly interests you must pay along with the initial capital you loaned. And if you want to know how to repay your student loan as fast as possible, then continue reading the article to find out how.
Statistics
On a global scale, the amount of student loan debtors come at around 44 million, accumulating a total collective amount of 1.5 trillion US dollars. That amount is what the young adults of the world currently owe the government, without factoring in the interests.
Why students take student loans
The primary and most obvious reason behind why students often rely on student loans is because of their lack of financial resources. Money is scarce, and it is even more difficult to spend an average of $21,000 annually just for university expenses. And unless an individual landed a scholarship, then their only option to pursue higher education while on a tight budget is by relying on a student loan.
How to repay you student loan as fast as possible
Having debt is already bad enough for your monthly expenses and living, and if that debt has a constant yearly interest that continuously piles up, then it will become a really troublesome issue. Which is why you need to pay your student loan as fast as possible so that you can live your professional life without having to worry about any loans to be paid. Here are a few tips on how to repay a student loan as fast as possible:
1. Review your loan’s terms of payment
The first thing one must do in order to repay their study loans as quickly as possible is by reviewing the terms of payment of the loans they made. There are a lot of terms of payment: there are some that will allow one to work for a few years to make them feel the hang of their career, and then after a said period, will have to pay the debt. Other study loans give the debtor a more flexible option, which could range from letting them choose when to pay the loan, or adjusting the monthly amount based on their salary.
Knowing the terms of payment for the loan one made will make the difference between having to pay excess interest or saving a lot of cash. If the study loan allows for 3 years of leeway to get an individual accustomed to their wok, then use that time to save up on some cash so that you can repay the loan in bulk later. If the loan made gives the debtor freedom to choose when to pay, then start as early as possible to make sure you are slowly chipping off at the capital amount.
2. Calculate the total amount you have to pay
One might simply think that the amount they loaned will be the amount they will repay as well. However, the government does not simply allow loans with no merit for them, which is why there will be an interest in the loan one made. Adding the interest to the calculations one made is an important aspect, as one might think that they have repaid the study loan fully, when in reality they still have interest to pay.
It is of great importance to calculate the total amount one must pay in order to be free from the student loan so that they can set a goal and keep track of the amount they still need to pay. Planning is always one of the most important aspects of any activity and repaying a student loan is no exception to the rule.
3. Budget your salary accordingly
Most starting salaries are naturally low compared to the average annual salary listed in most statistic webpages. This is because fresh graduates do not have any work experience, which is why their services are often deemed worth less than those with experience.
This time is one of the most crucial times in an individual’s career as the considerably low starting salary paired with the student loan needed to be repaid can seriously make one’s monthly paycheck gone in an instant.
Therefore, it is important to budget one’s salary accordingly. Set aside the required monthly payment for the study loan, then divide the rest of the paycheck properly into living expenses, transportation, and savings.
4. Be aware of taxes
Taxes are often a subject that is not discussed in class (unless you studied economics or commerce). This can often take young adults by surprise, as they will not be aware of how taxes work and will need to figure it out themselves.
In a broad sense, taxes are the community’s monetary contribution to the government. Every individual is asked to give a specific percentage of their salary to the government, the government then uses the money to make the quality of living of its citizens better.
Taxes also need to be factored in on an individual’s monthly budget, as one does not actually get the exact amount specified in their paycheck (unless the company they are working in already deducts taxes automatically). And if one is not careful and forgets all about taxes, then they will have to pay even more as fines, and this could hamper one’s progress to repaying their student loan even more.
5. Get aid from a financial app
If budgeting and calculation are not for you, then you can always get the aid of a financial app to help keep your budgeting and finances under control. There are a lot of financial apps out there, and each one will help keep track of your budget and loans.
This is a great way to constantly set a reminder of the bills, loans, and other expenses needed to be paid. This will make your time budgeting your salary easier and will allow you to keep track of your expenses and loans.
6. Keep watch over your spending
There will be times when the urge to splurge comes crawling into an individual, forcing them to buy unnecessary things and wasting their money. These urges will be really difficult to control, and difficulty will vary from individual to individual. However, this urge must be kept under wraps if you want to repay your student loan as fast as possible.
Unnecessary spending leads to a dent in your monthly budget, and might affect the other aspects of your budget. You may give up on putting any cash into your savings because you wanted to buy a designer bag so much when you had 5 bags to your disposal already.
7. Always prioritize repaying your loan
Obviously enough, one of the most effective ways to repay one’s student loan is to not miss out on paying the agreed monthly amount. Simply missing out on a month of paying your student loan will set you back an entire month from being debt-free. The interest will also pile up inevitably and will also result in an even larger amount you need to pay. So, always prioritize repaying your student loan every month to make sure you get to be debt-free as fast as possible.
8. Slowly increase your monthly repayment
One great way to chip away larger amounts at the primary loan is to slowly increase your monthly payment for the repayment of the student loan. As an individual gains more experience in the field, the value of their services also becomes more expensive. We often observe this as a pay raise.
Once you get your first few payment raises, pay more to the monthly payment for your student loan. This will hasten the time to finish repaying the student loan and also lessens the interest one has to pay for the student loan. It is like hitting two birds with one stone.
9. Work hard
We need effort in every activity in order for an individual to excel at the said activity. This is also true for the repayment of the student loan one has made. In order to truly repay the student loan as fast as possible, one must work hard and be diligent to accomplish the task.
Working hard allows an individual to be noticed by the higher ups and makes them more prone to promotions and payment raises. This will allow them to finish the repayment of their student loans faster. One could even work a side-job in order to rake in more cash, all for the sake of repaying a student loan as fast as possible.
Working hard will also be beneficial not only to the repayment of the student loan, but will also result to others having a more positive outlook towards yourself. This could lead to more future promotions and achievements.
If you liked our content and want to learn more, then consider visiting us at FamilyTutor: Singapore’s leading home and online-based tutoring agency. We offer private tuition from pre-school to university level students and cover a variety of subjects ranging from English, Mathematics, Biology, Chemistry, and more.
Carelle
Carelle is a teacher who has been through the ups and downs of the teacher and learner life. She wishes for every learner to gain educational satisfaction that will help embody the people they want to be in the future.
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About FamilyTutor!
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