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How can I make sure that I pay off a student loan as fast as possible?

I would prefer to not have to take out any student loans, but I know they are still a possibility. With such high interest, I know that it becomes difficult to pay it off quickly and there are many adults still paying off student loans from 15+ years ago. How can I best avoid this if I do need to take out a #loan?

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A’s Answer

While it is true that in some cases student loans my be inevitable, there are a number of factors to consider:
1) Any student can go on Google and do what I like to call "identity" or "demographic searches" for scholarships. Search for scholarships based on your ethnicity, your family's ethnicity, your town, high school, religion, your program of study, the school you're applying to or anything else that might be unique about your situation. Though it is time consuming, there is far more grants and scholarships available than most people are aware of. Remember that the comedian David Letterman had even once started a scholarship for "C" students. The sooner and more frequently you search the better your chances of finding them. I've also been told that this app helps: https://myscholly.com/
2) The current interest rate for undergraduate direct loans is 2.5%; 4.3% for grads, and 5.3% for parents (think Parent PLUS loan). Compare these rates to those for private loans. They're not that bad at all, relatively speaking.
3) Repayment options these days are better than they've ever been. There is an Income Based Repayment plan you can sign up for, which bases your loan payments by how much you earn. If you ever have an issue, like a loss of employment or major health issue (as I did), CALL THE STUDENT LOAN CORPORATION! THEY WILL WORK WITH YOU! No matter the reason you're not able to make your student loan payments, if you call the Federal Student Loan Corporation (the "FAFSA people"), they will usually work with you in some way, usually by giving you more time, and if you can't make it even then, you can always ask again. BOTTOM LINE: DO NOT FALL BEHIND ON PAYMENTS OR DEFAULT ON THE LOAN!! Default not only robs you of all future loan eligibility, but the government can take your tax returns until they get paid back or in the worst of cases, garnish your salary. If you are in trouble, CALL THE GOVERNMENT, and do not miss a payment outright!
So while student debts may be a necessity, they are definitely manageable so long as you do your homework beforehand, and inform your creditor (the government) before you miss payments. Good luck!
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Tamaka’s Answer

Hi. Sonia. You first need to complete the FAFSA for the correct year you are entering college. You won't know if you qualify for federal grants until you complete this application.
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wendi’s Answer

HI Sonia

Yes there are several ways to ask for forgiveness and grants that can help with paying off student loan quicker. Here is a link that should help.
https://www2.ed.gov/fund/grants-college.html
Additonally, if you have been affected by Covid 19 delaying payments will also be an option. Hope that helps
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Abby’s Answer, CareerVillage.org Team

Hi Sonia! I’m sorry no one’s answered your question yet. We're working hard to get it answered by Professionals with the best insights, but in the meantime I've included a link to a relevant Q&A here on CareerVillage.org that should be super helpful for you to read through.


Dena asked: What is the best way to manage paying off student loans?, and one of the Pros who answered it said:


When you juggle multiple priorities, it is hard to see what is the most important. My recommendation is to have a good mix. It is always best to pay your bills first. If you have any extra after then you should immediately start paying down on your loans. FI you are able to pay extra on just one of the loans, called snowballing debt, you can pay it off sooner (each one at a time). It can be as little as $10-$200/month. I am attaching some links to articles on this.


https://www.daveramsey.com/blog/get-out-of-debt-with-the-debt-snowball-plan/ https://www.nerdwallet.com/blog/finance/what-is-a-debt-snowball/ https://www.investopedia.com/terms/s/snowball.asp


Since you did not state where you are in the school process, I am making assumptions that you and your daughter are still in school. The advice below will impact that. In my experience, the best thing you can do is make a plan...


Click the question to read more of what this Pro and others had to say!


Good luck! 

Abby 

Community Management Intern at CareerVillage.org
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Yasemin’s Answer

Hi Sonia! This is a great question and great that you are thinking about this because it's a strong step to ensuring minimum debt in the future. In addition to the helpful answers I would also like to add two things; first after exhausting all options like grants, scholarships and work study for college tuition, take out federal loans first. Federal loans have very low interests in comparison with private loans, there are two types subsidized and unsubsidized. Federal subsidized loans should be your first option because the interest is paid while you are in school half time (10-12 credits I believe, but please do double check). If you do take out unsubsidized loans, then the interest will accrue and won't stop even if you are in school, so something to think about, however both federal loans are still low interest! Second, if you do have loans that accrue interest while in college try to pay them; paying the loan may be difficult but most of the time for students it isn't the loan amount but the interest that accrues that makes it hard for students to pay off debt quicker. I gave this example in another question as well; if you take out a 5,000 dollar loan and have 5% interest, the interest should be 250$ (based on the time period, such as daily, monthly or annual which also important to consider), now that may not seem much at first but if it is a monthly interest rate, that will build up. However if you pay even half of that interest and try to keep the loan within reach then when you graduate the debt accrued won't be as stressful. In addition when taking out loans be sure to read the fine details, with private loans you want to be sure of grace periods and when you have to begin paying back. Once again, as a previous answer as well suggested, make sure to fill out FAFSA first though because you really won't know the aid received until afterwards; possibly you won't need to take out too much loans!

I hope this helps!
Best of luck!
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Sadia’s Answer

The best route to save money is by going to the community college for two years and then transfer to the university. At the time of graduation, the student will get a university degree. The work-study option is also available in most universities. To keep their loans low, students work throughout college and increase their working hours during summer. Students can choose a college that offers the best scholarship. Students have to maintain a certain GPA to retain the scholarship till graduation.
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Simeon’s Answer

Some employers or programs help out with student debt. Teachers can get access to student debt relief and the big 4 accounting firms (KPMG, Deloitte, PwC, and EY) also have programs to help their employees out with student debt. Beyond that, try to get a work-study program on campus to reduce the amount of debt you'll be taking on, buy or rent used textbooks, and try to apply to colleges that have more generous scholarship offerings.
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