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Ways to reduce your student loan debt

Ask any student loan borrower about their debt and they’ll likely tell you, “do whatever you can to cut your costs.” That’s because student loan debt can be quite crushing. According to EducationData.org, in 2020, Americans owed $1.68 trillion in student loan debt, with the average borrower owing $37,584. It is imperative to your future financial life that you do what you can to reduce that number. Here are some ways to do that.

Keep Interest Rates Low

Maybe the best way to pay less on your student loans is to be preventative about it. Before even shopping for a loan, make sure you can get a great interest rate by improving your credit score. The higher your score, the better your loan terms will be. To increase your credit score, pay your bills on time for a long period of time and reduce your overall debt.

Pay Interest While in School

As Forbes notes, some loan lenders will offer you a low interest rate if you sign up to make payments while you’re still in school. Paying while in school can also benefit you because you’ll set yourself up to be ahead of the game when you graduate.

Try a Card

Some credit card lenders offer cash back and benefits if you use them on loan payments. For example, Sallie Mae’s Accelerate credit card pays 1.25 percent cash back on qualified purchases and a 25 percent bonus cash back if you use it on student loan debt. Just be sure to read the fine print before signing up for any credit card. You want the overall terms to fit your financial lifestyle.

Go Above and Beyond

If you can, make additional loan payments. Maybe you get a big tax refund. Or hey, maybe you hit the lotto. Whenever you receive a lump sum of cash, using it to make an extra payment on your loan. By doing so, you’ll pay off your loans faster and therefore reduce the total amount of interest you’ll pay.

Chris O'Shea

Chris O'Shea