The CARES Act of 2020 allowed borrowers to hold their payments on federal student loan debt without accruing any new interest. After several extensions, this deferral period is set to finally end on May 1, meaning millions of Americans will soon have to start increasing student loan payments again.
But instead of sweating it out, you can always devise a strategy.
It’s entirely possible to pay less than you owe and settle your debt long before the loan term expires – in less than a year, at best. Here is a collection of tips and strategies for aspiring borrowers with the lofty goal of settling college debt in just 365 days.
Read more: The hidden costs of education at all levels
1. Calculate your payments
The surest way to pay off any loan early is to pay more than you are required to pay each month – and when it comes to extra payments, a little can go a long way. Federal Student Aid (FSA) of the Department of Education gives an example of a 10-year loan of $15,000 with an interest rate of 4.9%.
By paying only an extra $15 each month, the borrower saves $395 and saves on the loan annually. An additional $30 saves $708 and cuts the term by one month shy of two years. An additional $60 results in $1,174 savings and a debt-free life three years ahead of schedule. Use the Student Loan Repayment Calculator to determine the additional amount you will have to pay each month to meet the one-year deadline.
2. Start early
If you have the time and energy, pick up some more work. Whether you provide your current services for overtime or you can make money on weekends mowing the lawn, consider taking a part-time job to add to your monthly income. Who knows – maybe working 60 to 80 hours a week for a year will wipe out thousands of dollars from your debt? If so, the short-term grinding would be worth it for the long-term gains. You don’t have to make loan payments while you’re in school or during your next grace period, but if you can, you definitely should. The FSA suggests paying at least enough to cover the interest on your loan each month, so there’s nothing to add to your capital when you enter the official repayment period.
3. Seek a job that qualifies for loan forgiveness
If you’re one of the millions of people who have quit a job as part of Great Resignation or are considering looking for greener pastures in 2022, your next job could be your ticket out of student loan debt. According to CNBC, about 35 million jobs are now eligible for the Public Service Loan Forgiveness Program, thanks to the program’s expansion in October 2021. About 22 million eligible jobs are federal, state, and local government jobs and 13 million are with nonprofits.
Discover: 20 Jobs You Can Earn $60K From College
4. Or look for a job in the private sector with student debt benefits
Many employers outside the public and nonprofit sectors offer student loan assistance as well. The Consolidated Appropriations Act of 2020 has made it easier for companies to offer student loan assistance as employee benefits — and many employers are doing so to attract and retain top talent, according to Forbes. Among the big name companies that provide some form of student debt assistance are Chegg, Carvana, Ally Financial, Estée Lauder, Hulu, Google, Terminix, SoFi and Lockheed Martin.
5. Serve before you work
You may have already learned that you can save more money by doing more things at home. Preparing your meals, watching movies on Netflix, and even mixing your own cocktails can be a lot cheaper than g If you’re a recent school graduate and want to delay your entry into the workforce, consider volunteering at an organization like Peace Corps or AmeriCorps. You’ll gain exposure to different cultures, a sense of purpose, lifelong connections with fellow volunteers, educational awards, stipends, and a bright spot on your resume—but you may also be able to get rid of student debt. Service in both organizations can result in loan forbearance, forgiveness or cancellation, but the method and amount of reduction varies depending on the type of loan.
Read: Budgeting 101: How to Create a Budget You Can Live With
6. Register for automatic discount
Many loans incentivize borrowers to sign up for the automatic payment system by offering a reduced interest rate to those who authorize the automatic deduction. For all but the most modest of loans, you’ll have to pay more than your loan agreement requires each month to get out of debt in anything close to a year, but a lower interest rate means you pay less money overall. As an added bonus, AutoPay prevents you from accidentally missing a payment.
7. Salary Allocation Preparation
Check with the human resources department at your job and see if your employer offers payroll allocation. With payroll allocation, a certain amount of your regular paycheck goes directly to another account and not into your main checking or savings accounts. If you don’t see money, you won’t be tempted to screw up your paycheck. Soon, you will have amassed a large amount of change that can be used for a one-time payment on your student loans.
8. Postponing saving for retirement
Contradicting standard financial advice is the strategy of opting out of your company’s 401k plan or your IRA and using what would have been your contributions to pay off student debt. Only you can decide whether debt forgiveness in just one year is worth losing 365 days of retirement savings, but young graduates have time on their side — and enjoying their twenties without student debt might be a trade-off.
Learn more: 50 awesome ways to try and save money
9. Get a roommate
If college doesn’t burn you out in shared living spaces, consider cutting your housing, utility, and subscription bills by hiring a roommate—at least temporarily—if your space offers the opportunity. Apps like SpareRoom, Roomi, RoomEasy, and BunkUp make finding a roommate safe and easy.
Coming home is the least preferred option for many college graduates, but in most cases, it is an opportunity to significantly reduce living expenses. If your parents want to bring you home to enjoy another year—and are willing to let you in on low or no costs—this is a surefire way to cut costs and devote yourself to debt servicing.
Keep reading: The perfect salary for Ford College
You may be ready to run. Or you might say, “Ah…maybe in a few years.” If paying off your debt within a year simply isn’t possible, consider your next option: figuring out how to reduce the amount of time you’re in debt.
The average payback schedule is 10-20 years, so your goal should be how to reduce that schedule to seven, five, or even two years. This can be achieved by creating a detailed budget, using a debt snowball strategy and implementing some of the 10 tips mentioned above.
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This article originally appeared on GOBankingRates.com: 10 Ways to Pay Off Student Loans in 1 Year