Taking a loan as a student is one of the best ways to be financial stable in college, there are many type of loans available for college studies depending on your location but the problem most college student have is how they plan to repay the loans they collected, so we would be Revealing how to pay off student loans on low income.
So before we continue, let’s discuss a bit about student loans and various types of student loans.
What Is A Student Loan?
According to Wikipedia ” a student loan is a loan that is designed to assist students scale through post secondary education”.
It covers a wide range of financial costs for students like buying of textbooks, tuition, accommodation and living expenses.
A student loan is different from a regular loan because it has a low interest rate and payment can be deferred while still studying.
Different Types Of Student Loans
There are basically three types of student loans, federal loans, private loans and refinance loans.
Federal loans are one of the best type of loans a student can apply for, they are provided by the government, and are categorized under four segments which are
- Direct subsidized loans
- Direct unsubsidized loans
- Perkins loans
- Plus loans
If you are interested in applying for the federal loans you can fill out the Free Application for Federal Student Aid popularly called the FAFSA.
Private loans are provided by different banks and also financial institutions with the aim of assisting students achieve their education dreams.
They are created for students that have specific needs for them. Example of private loans.
- Bar exam loans
- Medical school loans
- Bootcamp loans etc.
How To Pay Off Student Loans On Low Income
#1. Earn More Money
this is one of the most important strategies if you want to know how to pay off student loans on low income, you have to earn more money.
You can’t pay off your Loans with the little bucks you get, you might be contemplating on how you would earn more money.
The answer to this question is having a side hustle.
You have to look for a side hustle that can add to your finances.
Also you can look for a part time job which you would use to raise your weekly income.
If you are working full time and can’t add a side hustle you have to apply for a promotion or increase in wages, or still switch industries to one which pays more.
#2. Reduce Your Spending
Paying off student loans involves a lot of sacrifices, and this is one of the sacrifices you have to go through.
If you are indebted and haven’t paid out your loans you have to have control on the way you spend your money.
You have to stop buying stuff that is not really important.
If you want to get anything, you have to evaluate yourself and ask yourself if you really need it.
After evaluation yourself and you feel you really need the stuff, you can consider buying a fairly used one from eBay or Facebook marketplace which can be more cheaper.
Also Read: How To Download Free College Textbook In PDF
After you have successfully cleared your debt, you can have the luxury to buy anything you want. So you just have to endure till your loans are cleared.
#3. Set Up A Monthly Budget.
This is another smart way to pay off your student loans on a faster schedule and low income.
You have to set up a monthly budget, list out all your incomes and expenditures each month, this will help you manage your finances better.
Having a monthly budget would also help you make extra payments if you are opportuned to be with extra cash.
#4. Avoid Repayment Plans That Stretch Your Terms Of Payment.
One of the best ways on how to pay off student loans on low income is to avoid repayment plans that stretch your terms of payment.
Most repayment plans lower your monthly payment, that means that you would have more interest to pay.
The best type of payment plans for individuals living on low income is to enroll in a government repayment plan.
Example of such payment is the income based payment,
#5. Refinancing Student Loans
This is another cool strategy to pay off your student loans on low income.
Refinancing your student loans means combining all your loans together and taking a new loan to pay off the old loans.
The new loan would come with a fresh interest rate and new monthly payment amounts.
You can refinance your student loans only when you have a good credit score.
Also Read: Guidelines On How To Live With A Roommate You Don’t Like
Also know that if you refinance your student loans you would no longer have access to federal services like student loan forgiveness or income driven reimbursement.
Conclusion
These are five strategic tips on how to pay off your student loans with low income.
Note that you should pay off loans with higher interest rates first.
If you are the kind of person that easily forgets about loan payments, you should enroll in an autopay platform to avoid future problems.
If you need professional guidance to pay off your loans, you can contact us on our official email, and we would be glad to help you.
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