The student loan system is undoubtedly something that many people struggle with. It may be because of a lack of financial awareness, or numerous other factors. Even if you are adept in financial matters, student loan can be something quite tricky to figure out.
Many people are often put off by the idea of higher education because of the huge interest rates on student loan. If you are able to repay your student loan soon after graduation, then you can consider yourself to be one of the luckier ones.
In fact, there are thousands of people who struggle to pay off their student loan. This could be due to poor planning, and it could also be mostly due to the high-interest rates. Very few people are actually lucky enough to get through college on fully paid scholarships.
If you want to pursue higher education but are wary of the student loan interest rate, there are a few things that you can do to reduce the student loan interest rate. Below, you will find a few tips on how to manage the student loan rate. Apply these tips in the right areas, and at the right times, and you can benefit from a drastically lowered student loan interest rate.
1. Refinance the student loan
When we talk about refinance of the student loan, we mean that you could change your student loan provider to another student loan provider with a much higher interest rate. In such a case, the new student loan provider or agency will actually pay off the old student loan debt. This means that you only need to make payments to the new student loan agency. However, a number of factors are important when it comes to getting a better student loan provider.
Firstly, you need to have excellent credit scores. You can also have a co-signer who has a great credit score. A good to great credit score would be around 600 or higher. Secondly, you should make sure that your income is enough to manage the daily and monthly expenses such as rent, electricity bill, phone bills, as well as credit cards. The higher the credit score you have, the lower your interest rate will be.
Before you take up this idea of refinancing for your student loans, you must have an adequate amount of time and energy to do your research. Compare the student loan agencies and check the pros and cons of each.
Also read – Why are Internships important for Students?
2. Autopayment of your student loan
For this particular tip for a student loan to work, you need to make sure that your financial condition is stable. You need to plan ahead and ensure that you have a certain fixed amount in your bank account at the end of every month. Autopay means that at the beginning of every month, the interest rate for the student loan debt will be deducted from your account.
If you can get the time, try to get some freelance jobs and work remotely. Make some extra cash.
Moreover, a lot of student loan agencies offer a range of discounts for using autopay. They reduce your student loan interest rate based on your credit scores, with the added incentive of a further reduction thanks to autopay. It may not seem like a lot of reduction at the time. However, any amount adds to a greater one at the end of the month. They all build up to larger and larger savings. So, don’t ignore this tip for student loan if you can help it!
3. Make use of loyalty discounts
A lot of student loan agencies offer discounts in the interest rates for their loyal customers. Basically, the discounts may be quite small. However, in the long run, they increment nicely together. At that stage, you can get a nice return on your loans. Just make sure that you are aware of the terms and conditions of the loyalty discounts and read the documents thoroughly. It would be better if you are able to get some reviews from people who have taken up the loyalty discounts.
See how they have fared with this scheme and then make your decision. It is always better to run some background checks on each scheme that you come across. This makes things a lot easier to deal with as well.
4. Higher interest student loan to be paid off at the beginning
This tip works if you have two different loans, either from the same student loan agency or from two different ones. Basically, one loan may come at a higher interest than the other. In such cases, it is better to pay off the student loan with the higher interest rate first. This will free you up financially to take a bit more time to pay off the second student loan.
Although it might seem like this could take a longer while than necessary, as you could be a bit drained from paying off the higher interest, it actually helps you recollect yourself and reassess your finances once again. At this time, you will be able to manage your finances much more closely as well.
5. Military enlisting
Enlisting for the military is another way to drastically reduce your student loan debt. Basically, the military has different schemes which help in furthering the education of the enlisted soldiers. Moreover, they can really help reduce the interest rates quickly.
Although it does make things more difficult, as you are in a completely different environment then you would be in a college or university, it does help you in other ways. Moreover, if you are someone who is serving the military in a known hostile nation or area, you are completely exempted from student loan for up to 60 months, or 5 years. However, you must speak to your loan agency beforehand and set up the paperwork well in advance before you are deployed.
So, these are a few tips which can help you save some money and reduce the stress on your pockets. Make sure to follow the tips here to the best of your ability. In addition, also ensure that you run background checks and do your research properly before deciding on a loan agency.
How can I get my student loan rate lowered?
– Apply with a co-signer
– Choose a shorter repayment period
– Opt for a variable rate loan
– A strong credit score can also get you better interest rate
Will the student loan interest rates go down this year?
Yes, it is expected. We can see a sharp drop in the student loan interest rates this year as the market recession and epidemic has made the banks more desperate.
Should I refinance my student loan?
Yes, but only if you have a good paying job and a good credit score. Its best to get financially stable first.