With college graduation season just a short six weeks away, most recent graduates focus on surviving final exams, crossing off the last remaining items on their bucket lists, and securing new job or fellowship opportunities. While the Commence Day ceremony marks the conclusion of undergraduate life, it also signifies the beginning of paying back student loans. Even those who deferred their first student loan payment will need to begin planning. We compiled five easy-to-implement ways to plan for student loan payback that will not break your budget.
1. Make a lump sum payment
After May graduation, many students will be receiving graduation gift money, job signing bonuses and tax refunds. Applying this lump sum to your student loans can save you thousands in accrued interest and decreases the repayment time. Use Make Lemonade’s Lump Sum Calculator to gauge how much you could save in time and interest by applying a lump sum at the beginning of repayment.
2. Make more than the minimum payment
This tip is quite straightforward. The more you pay, the less interest is added to your remaining balance and the quicker the loan is paid off. No need to put pressure on yourself to double the payment. Even $50 more each month will make an impact. Still on the fence? Incorporate this added amount to your automatic loan payments so that you stay consistent and hesitation-free in your payments.
3. Refinance Your Loans
Regardless of whether you have one loan or multiple, refinancing creates an opportunity to lower your interest rate. Before diving into refinancing, first consult a lender to verify that your interest rate will decrease. Here is a list of awesome banks that help refinance loans.
4. Avoid Repayment Programs
It is true that many of these programs aim for lower monthly loan payments. But they do so by extending the length of the payback term. This means that it will take you longer to pay back your balance and your principal will continue to accrue interest during that extended period.
5. Start a Side-Hustle
Spend a few hours each week on a side-hustle that you contribute 100% of the income into loans repayment. Ideally, choose something easy and enjoyable that does not restrict your schedule. Do you enjoy shopping? Apply to work part-time at a retail store. Get a discount off of apparel, and direct that cash toward your loan. In California, working one 5-hour shift per week at $11.00 minimum wage means you could earn $220 toward your loans every month. Not a bad trade-off, eh?
Regardless of how you tackle the loan behemoth, be proactive about making a plan. Loans can be a challenge to navigate, but with the proper strategy, you’ll find your balance at $0.00 in no time.
