If you’re working to get out of debt, the last thing that you want to do is pay more than you have to. You want to be able to save money on your student loans and any other debt that you have in order to pay them off as soon as possible.
I specifically say student loans, because it’s almost unheard of not to have them!
Today, the total student loan debt in the US surpasses $1.4 TRILLION (with a T) dollars. So if you ever thought that you were alone, trust me, you’re not.
Until several years ago, I was also wallowing in student loan debt. Though I only started tracking the amount when I began my debt-free journey in 2013, at that point, it totaled around $78K. I was able to pay them off and you can too!
But, don’t just pay them off. It’s wise to look for ways that you can save money on your student loans while you’re paying them off.
4 Simple Ways to Save Money on Your Student Loans
There are some really simple ways that you can reduce your student loan payments. Here are a few that have worked for me and others.
1. Sign up for autopayments
As daunting as it may seem to have your lender grabbing your money right when your direct deposits hits, it may be to your advantage.
Some lenders reduce your interest rates by a fraction of a percentage when you sign up for auto payments. It’s a small “Thank you” for making sure they get their money. Every. Single. Month.
I immediately signed up for auto payments with my lender when I discovered this in the fine print. Give your lender a call to find out if this is an option for you. Remember, pennies add up over time.
2. Make extra payments
This may seem obvious, but making extra payments on your student loans to reduce the principal balance goes a long way.
I’d rather not give a math lesson here, but know that your interest is calculated based on your principal balance. (It’s the equation that you learned in the college math class that you’re still paying for.)
In a nutshell, the lower the principal, the less interest you pay.
Lenders make their money off of interest and they’re relying on you making the minimum payment– which probably only covers the interest anyway– to collect more coins.
The longer that it takes you to chip away at your principal balance, the more money you’ll end up paying.
Not sure how to make extra money? I’ll be sharing a blog post on some side hustle ideas soon. In the meantime, take a look at your budget to see where you can cut costs.
3. Apply for income based repayment
Are your payments a little over your head? If so, it may be worth it to apply for income-based repayment.
Most lenders offer the opportunity to make payments that are conducive to your income. Give your lender a call to find out exactly how much your payments will be based on your income. (Don’t lie, because you’ll need proof.)
In some cases, you may find that the payment amount may be higher, but it doesn’t hurt to ask. Get your payments lowered while working to bring in extra money to pay your loans off quickly.
4. Apply for jobs with loan forgiveness
I’ve known several people to use this approach. Public servants have the ability to have their loans forgiven after a certain number of years of service.
If you’re a college student, you may see organizations like Teach for America around your campus recruiting graduates to volunteer as teachers in impoverished communities in exchange for student loan forgiveness.
If this is something that you can commit to, by all means, check it out! If you’re working, ask your employer if they have forgiveness programs that can be applied to your loans.
Try these four simple ways to reduce your student loans and see how it works.