The greatest barrier that prevents millennial from investing is the weight of college loans. According to the recent worldwide report, the depth of student loan has resulted in a hike of 6.05% resulting in a net worth of $37,172. In this article, you will get know about some quick tips that will help the students settle their debts once and for all.
1. Think of loans as a mortgage
Treating loans like mortgages will help settle principal amounts more effectively. Consider an individual taking a student loan of $25,000 with a 10 year payback period and an interest up to 6.8%. This means that the individual has to pay $288 per month. Now if the individual decides to pay $700 per month then the student loan will be settled in three years only. Another way of settling the student is adding frequent checks which will be sent to the bank on weekly basis rather than monthly.
2. Create a 3 to 5-year plan
In order to get free from the hassle of student loan, an individual must create a 3 to 5-year plan. This is comforting because the individual will know that the loan will not be stretched and will have the possibility to end up early. Consider an individual who has taken a loan of $50,000 but now earns over 100,000 per year. Now if the individual creates a 3 to 5-year plan to settle of the debt then the individual must pay $800 per month. This would definitely cut cost on spending but if the individual does not follow this rule then it would have taken the person a period of 15 years to settle of his debt.
3. Create a college repayment fund
Keeping the money in savings is one of the methods to settle of student more quickly. If money had not been moved aside for savings then the money would be definitely be spent on dining out and clothing. Creating an account just to pay the fund will make all the difference. Now, this account will only beused to pay off the debt.
4. Refinance Your Loans
Aside from using different ways of thinking to help address your student loans, there are more straightforward ways of actually lowering the amount you pay overall (specifically because of interest). If your interest rates, for interest, were initially very high (above 7% as an example), then you could benefit greatly from refinancing your student loans. This is a fairly simple process depending on the service used, but can lower interest rates substantially, and as a result, lower your monthly payments substantially. For determining how much refinancing can help you, this site has the most robust calculator that we've come acrosshere.
5. See the future
Researchers say that the most common problem of people of not settling the student loan on time is the fact that the loose sight of their future goals. Imagine if the student can see the future of settling the debt faster and not lose money on dining out and other expenses then the student can settle off the loan much faster. Thus maintaining a discipline regarding finance will help the individual to pay off his loan before the allotted time. Though maintaining a financial discipline is tough but it is all the trouble.