Best Review - Top 5 Steps to paying off a student loan


lear your debts and free up your cash for better things.
Leaving university with debt isn’t ideal. However, with £11.8 billion in student loans lent by the Student Loans Company in 2015/16 and 5 million borrowers at the end of 2016, it’s a reality for a lot of people and something most graduates have to deal with. Whether you’re a Student Loans Company borrower, you’ve taken student loans from a bank, or you have a combination of the two, there are five simple steps to follow to pay off your student loan.

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Get organised

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When you’re starting the process of clearing debt, begin by getting organised. If you have multiple loans then work out which one you are paying the most interest on. Create a list of loan totals, interest rates and repayment schedules, along with final repayment dates. Work out whether there are any penalties for repaying early and where it would benefit you to do this.

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Start making loan repayments

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You may need to adjust your spending to ensure that there is enough cash available to cover student loan repayments. It’s helpful to time the repayment so that it is made as soon as you’ve been paid, to avoid the temptation to spend the money on other things. If your employer is making the loan repayment directly then make sure you have factored this into any monthly budgeting so that it doesn’t come as a shock.

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Can you overpay?

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If the length of the loan seems a bit like a financial life sentence it might be worth looking into whether you can overpay on the monthly amount to clear the total sooner. This would put some extra pressure on your finances now but should reduce the overall interest that you pay on the total that you borrow. There are various options when it comes to creating extra money to help with overpayments, from cutting back on luxuries, to finding an extra income such as renting out a spare room.

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Be consistent

For recent graduates, student loan repayments might be the first step in creating a credit history. That’s why it’s so important to be consistent when it comes to making the repayments. Keeping up the payments on a student loan - or loans - could create a solid credit record that will give future creditors a positive impression of you as a borrower. Why does that matter? Well, taking these loan repayments seriously now could open the door to a mortgage or small business loan at the point in life when you need them the most.

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Stay on top of the admin

While most lenders are pretty organised when it comes to the end of your loan repayments, some student loans organisations are not. There are plenty of horror stories of students who haven’t kept an eye on the repayment totals and have ended up making payments over and above what was required and then having to fight to get the money back. Be smart, stay on top of what you’re repaying, both for the purposes of motivation and to make sure you don’t pay a penny more than you need to.

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