(MoneyHippo.com) – In 2022, the national Chamber of Commerce released data concerning student loans indicating that the average balance on student loan debt hovered around $37,000. That amount could be daunting to any former student, and the obligation’s long-term nature can impact a person’s financial wealth. Paying down loans as soon as possible can positively affect an individual’s money situation. Here are three smart ways to rid yourself of student loan debt for good.
- Overpay: Banks or other financial institutions tie interest rates to the money they lend. The longer it takes to repay the loan, the more interest the borrower pays. To reduce that sting, consider paying more than the monthly payment and applying the extra amount directly to the principal. This strategy helps you pay off the debt faster and save money in the long run.
- Refinance: Take a look at the loans’ interest rates and compare it to the current rates offered by the bank. If the percentage is lower than what you’re currently paying on a student loan, it might be beneficial to refinance to get that lower rate — lowering the payment. However, consider continuing to pay the same monthly amount, applying the extra to the principal so you can pay off the debt faster.
- Snowball: Dave Ramsey recommends using the snowball method when paying off student debt. First, list all your obligations from the smallest balance to the biggest. Then, pay the minimum on each obligation, except for the smallest loan. Put every bit of extra money into paying off the balance of the smallest loan. Once you’ve paid it off, tackle the next biggest. Continue moving through the loans in that manner, concentrating your funds on paying off each encumbrance until they’re all gone.
Following a budget can help you reach financial goals. Before you know it, your student debt will be a thing of the past.
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