9 Step Student Loan Plan

student loan plan

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I am finally FREE from student loans.  I started with close to $60,000 in student loans less than 15 years ago.

Do you know how hard it is to pay for student loans after classes are over?  You may have an idea if you’re reading this now.

You finish school, land a job, and then you continue to pay for school.  And pay. And pay.  Month after month, year after year.  And there is nothing you’re holding or enjoying when you fork over the money to your student loan servicer every month.

Now, I am all for education to further your development.  As with anything, I think you need to weigh cost and benefit before you dive in.  Education should always be a positive investment that pays itself off.

However, you need to work at it to payoff loans in a timely fashion.  Payments that continue to increase throughout the loan term along with the interest you pay can all be very disheartening.

I would look at the interest occasionally from time to time.  At one point, I had paid $1,500 in interest on one student loan in one year.

When I saw how much I was paying in interest, I knew I had to do something about it. I started scouring the web looking for ideas on how I could get them paid down.

After paying on student loans for years and doing so much research, I’ve compiled my 9 Step Student Loan Plan.  Try one, try a few, or try them all.

1. Refinance

This can be overlooked by some because you don’t always know all of your options.  Student loan refinancing can also be more scarce among banks.  You hear about refinancing a house, but some don’t take the time to cut down on those smaller loans like a car or student loan.

I looked at refinancing my student loans, but there were lots of requirements and some of them I didn’t meet. In my situation, my rates were lower than the refinance rates and cost to refinance at most banks.

One student loan servicer seemed like the answer to my prayers with their low rates, but my school was not on their list of schools they worked with.

If you will lower your rate and the cost of the refinance does not exceed the benefit of the refinance, then this is a great way to save.

2. Consider a home equity loan

I explored doing a Home Equity loan with a credit union to lower the rate, but the representative never called me back.  Life happened and I didn’t end up taking out a home equity loan.

If you own your home and have some equity in it, this may be an option for you.  Rates are very low with a home equity so this option could add up to big savings for you.

You want to be fully aware that it is another lien on your property.  If you default on a home equity loan, it’s essentially defaulting on your mortgage because both liens are tied to the property.

3. Lump payments

Lump payments are the best way to payoff your student loans quickly.  That extra money you get throughout the year is one of my favorite ways to see the principal balance go down fast.  Birthday money, extra check on a biweekly cycle (2 extra checks per year), income tax return (state and federal), side hustle money, or selling things you no longer need.

It can be hard not using that money for what you want to use it for, but it could mean you’ll be counting less days, months, and even years if you do this one thing.

4. No minimum payments

I could have lumped this in with the last one.  Get it, lump? 🙂  I want this one to stand out and be as important as making lump payments.  This one is not about paying extra payments when you get extra cash throughout the year.

This is about paying something each month, week, or every two weeks with what you are currently making.  Can you make some room for an extra $5, $50, or $100 each month?  Maybe, you are living on ramen noodles and you can put an extra $250 or $500.  Whatever the payment is, try to squeeze out a little extra to put toward your loan.

When you pay extra, you essentially lower the interest rate and pay less over time.  Maybe you tried a refinance or a home equity and neither worked out for you.  You can lower that rate by making more than the minimum.

5. Do not opt for the deferment  

Some student loan servicers automatically put your loans in deferment until your “repayment” officially starts.  If you have a job already, why do you want to be in deferment?  The longer you wait to start paying, the longer you have those student loans, and the more you’re paying in interest.  Start paying on those loans as soon as you are able to do so.

This was the case with one of my student loan servicers.  I called and asked what my monthly payment was and they said that the loan was not in a repayment status and that my loan was in deferment because I was still showing in school.  I had a job at the time and could make payments so I asked them to take the loan out of deferment and they did it right away.

6. Make payments while in school

It’s not uncommon to have a job while in school.  I can tell you that student loans last for so long and you begin to loathe them pretty quickly.  Don’t let the stress add up after you’ve received the degree.

Pay on them while in school if at all possible.  It’s easier to unload that money while you’re focused on learning in the classroom than it is once the classes are over.

7. Talk to your individual loan servicer to see your options

I could not pull a payoff for one of my student loans recently and I called my servicer and inquired about it.  The reason I could not pull the payoff is because they offered a discount for paying it off early.  Say what?!

The sooner I paid off this particular loan, the bigger the discount was.  It was a relatively smaller loan with close to $8,000 remaining.  I received a discount of approximately $700.

Sadly, it was the last student loan I paid off because I wasn’t aware of this benefit.  Maybe, it was part of the agreement some 15 years ago when I took out the loans, but that was 15 years ago.

I used to hear that student loans were an investment which can be true.  I used to hear that they are the best debt you can have.  I believed this when I heard it from others and was okay with it when I was younger.

The thing is that the interest rate on my student loans while still at a reasonable 6 and 7 percent was higher than any other interest rate I ever paid for any other loan.  It was higher than any mortgage I’ve had or any car loan I paid.

8. Ask about autopay

Some student loan servicers offer a .25% discount or more for enrolling in autopay.  Yes, .25% may sound like a small number.  When it comes to a $40,000 loan that takes you 20 or more years to payoff, that can add up.

9.  Do your research!

You went through the education to further your development and are continuing that development by reading as much as you can about your options when it comes to paying off those loans.

Look at what you’re paying on your student loans.  What is your interest rate?  How much of your payment goes to interest?  It’s time to get serious with a plan if you are paying more interest each month than you are principal.

You could always just ride the wave and pay the minimum payments each month and keep your student loan for the scheduled term, but WHY?

You ALWAYS have options.  The more educated you are, the more successful you will be in paying them off quickly.   Get on the right track now whether you are currently in school or in repayment.


What are your tips for paying down student loans?  Leave a comment below.  Continue to follow me here for more tips on saving.





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