How to pay off your student loan more quickly
Student loans in the UK can help students cover tuition fees and living expenses. However, there is an interest rate for these loans’ repayment. Also, the repayment only starts in April after you finish or leave the course, as well as if you are earning a certain amount before tax and after deductions, depending on your student loan plan. For example, you will start paying for the loan only if you get over £388 a week for your income before tax and after deductions. Moreover, the repayments automatically stop if your income goes under the said amount or you stop working.
If you have a postgraduate loan, the repayment will be 6% of the amount you earn, while it will be 9% if you are on plans 1, 2, or 4. If you wish to make extra payments or pay the loan in full, there is no additional cost. If you want to be free from your student loan quicker, here are things you could do.
Make extra payments
As mentioned, making an extra payment does not incur an additional fee. So, if you can afford to pay more than the minimum cost required, it can help you finish paying the loan faster. You may also increase the amount deducted from your salary or make a payment every couple of weeks instead of monthly. Again, it will shorten your repayment period.
Create a budget and stick with it
You can afford to pay extra if you work on your budget correctly. It could mean letting go of non-essential things or some of your wants, but it could free you from debt faster. You may also work with a financial advisor for professional guidance in managing your finances. If you live around the Bristol area, a local financial advisor in Bristol can help in this matter. You can schedule a no-obligation consultation to determine if you are the right fit. You must be comfortable working with the advisor to work together about your finances. Take this consultation as an opportunity to test the waters.
Pay the student loan in full
If you can afford it, paying the student loan in full is the fastest way to be free from it. Contact the SLC or Student Loans Company to determine how much you owe and the settlement date or when you should pay the amount. If you cannot pay it on the date provided, contact SLC again to let them know, as the amount could change after the deadline.
Get a part-time job while studying
If you are still studying, getting a part-time job to save money to pay your student loan would also help. However, you may need to keep it in the bank for the meantime and make extra payments once you start repaying the loan.
Check the interest rate and consider refinancing
Check for lenders who could refinance the student loan at a lower interest rate. Of course, you still need to repay the lender, but if the interest rate is lower, it would be easier in the pocket.
The quicker you pay your student loan, the faster you will enjoy financial freedom. So, manage your budget to pay it off earlier.
