6 Ways to Pay Off Student Loans Faster

The student loan crisis in the US is at its worse, with over $1.6 trillion in student loan debt, distributed among some 44 million students. With the average student loan debt ranging around $39,400, every graduate is trying to find unique ways to pay off their student loans faster.

People tend to opt for all sorts of different ways to put an end to their student loan debt. From odd jobs to extra/side jobs, to freelancing – people have tried all sorts of ways to pay off student loans faster.

However, most people don’t know that there are some ways to make debt life easier. Going in blind never works out, it’s always good to know your options and plan accordingly.

The following are some ways to pay off student loans faster.

Organize Your Repayment Strategy

You need to get a complete outlook on your debt situation. This means you should go and check your federal student loan amounts at the National Student Loan Data System. If you have private student loans, you can check them by going through your credit report.

It also helps to keep track of any other debt you have, such as vehicle debt, credit card debt, or mortgages. It will help you strategize your payments.

You should also note down all your balances and the interest rates on your loans. Calculating the interest payments will help you understand your situation. Maybe you can postpone some payments or maybe they’re more affordable than you thought.

Pay Above the Minimum Payments

Most people don’t realize this but paying just above the monthly minimum can tremendously reduce your interest payments and debt period. Even if you end up paying a little more, it ends up saving you a lot in the long-term.

You can save up a little more for this by not spending much money on eating out, or personal expenditures such as video games. Spending money strategically can help you pay that extra amount.

According to Business Insider, paying only $100 more in monthly payments can reduce the loan period by 32 months, and help you save up to $5,000.

Refinance and Consolidate

Loan consolidation helps you combine your loans into one big loan payment per month. It helps you organize your loan payments and gives you a clear idea about your payments and interest rates. This lets your loan’s interest rate with the current market rate.

If the current rate is lower, you can negotiate for that lower rate which would mean you now have to give lower interest payments. This means that a bigger chunk of your payments goes towards paying off the principal amount.

You can refinance your loans after consolidation to get that lower interest rate, and even, lower monthly payments.

Try a Side Hustle Out

Side hustles are practically any legal business practice that helps you earn extra money on the side. This can also help you follow your passion by trying something that interests you. You have fun, learn new skills, and supplement your income, all at once.

You can try to sell clothes, set up a food stand, or freelance on online sites.

Leverage Tax Deductions and Credits

If you have student loans, you can go for an interest deduction on your federal taxes. You might need to properly apply for it by providing details of your loans.

If you succeed, you can shave off up to $2,500 in your taxable income to pay for the interest on your student loans. The good thing is that it’s not a one-time thing, and you can do it every year.

The money you save can go to a little extra on your payments. As previously mentioned, even $100 can make a huge difference. Hence, saving $2,500 means you can pay up to $200 extra every month, while still saving $100 by the end of the year.

Saving is Key

While you shouldn’t compromise on your living standards, it doesn’t mean spending money on unnecessary things. It’s essential to save some money over the years, or you can end up in even more debt. You can take out a credit builder loan to improve your overall financial condition for the future.

While you set up a way to make your monthly payments, you should also set up a way to save a certain amount of money each month. You can set up a savings fund or set up automatic savings.

If you work for a company like Cisco that provides benefits like tuition reimbursement, you can use that to pay for any current fees. This would let you save additional money for any future needs.

All in all, you can use some, if not all of these ways to either reduce your monthly payments, reduce your loan period, or just improve personal finances. Out of all these ways to pay off student loans faster, the common thing is that you need to properly plan and strategize it all.

5 Compensation Management Tips to Improve Employee Finances

Compensation management entails how companies view and manage employee benefits and pay. Companies tend to make up a compensation strategy that serves as a guideline on how to manage and articulate employee compensation on all fronts.

If your compensation management is noteworthy, you are likely to retain current employees, while also attracting new ones. There is a common misconception that compensation management is all about salaries. However, it also includes all of the employee benefits and any extra appreciation gifts/rewards.

The following compensation management tips are just parts of a larger compensation strategy. Not all companies will have the same strategy. This is why you should focus on the tips that may work best for your organization.

Develop Salary Brackets

You need to make sure that you develop your salary range according to the industry standards, in order to make your offers competitive (as per current demand) if not better. To do this, you need to benchmark similar jobs in the industry which will help you create an effective pay structure.

You can also develop salary brackets by checking out the pays for similar jobs online on websites such as PayScale. This also helps realize the differences in salaries and benefits across different areas and industries.

You can also pay third-party vendors to develop your salary payments, but if you have a big enough HR presence, you can do it in-house.

Allocation of Budgets

During your annual budget allocation, you need to set aside a good sum for compensation management. You should have a sum in mind (having gone through historical records) about how much money you need, to move forward. You should always try to increase that amount for the next year and develop a more comprehensive compensation budget, provided you have the resources for it.

Developing a budget that lets you spend on your employees’ pay and benefits freely will always mean good compensation management. As long as you’re fair with your compensations, you can be sure that your employees will be satisfied with that.

Proper allocation can be done more specifically, by distributing the compensation budget into different categories of salaries and benefits. For example, you can allocate different amounts to monthly salaries, overtime, and bonuses. Similarly, you can allocate different amounts to health benefits, PTO, tuition assistance, and 401K’s.

Develop a Flexible Benefits Package

Nowadays, instead of the salary, employee benefits are usually the number one factor people look towards (when evaluating a potential employer). This means that organizations can and do use attractive benefits packages to attract and retain employees.

Developing a flexible benefits package is all about offering choices to your employees. For example, if you are providing medical insurance, give your employees the choice of choosing where their insurance can be used. For example, if they want to spend more on dental, they should be able to do so.

You have to make sure that your benefits package is competitive and even better than others provided in the industry. There is a good chance that someone may choose you even if you’re offering a lower salary, but better benefits. Plus, if you offer to help people pay off student loans faster, it’s another plus point.

Use Performance Management Systems

Performance management systems are now a compensation management must. These systems track, record, and analyze employee performance over certain periods. They are then compared to not only historical records, but also current and future objectives and goals so that you can see whether the employee is performing up to the mark or not.

To use performance management systems properly, you will need to update your annual goals and objectives, develop performance appraisals, and a system for helping underperforming employees.

Structured Administration

Compensation management is a tedious task, and unless you have a properly structured system to deal with it, you may experience redundancies, lag, and drag. This is why you need to assess and modify your annual review process, raise process timeline, and salary audits, to keep your administration up to date.

You also need to develop a process for each aspect of salaries and employee benefits. For example, you may need to update how you offer your benefits, like if you want to offer full medical insurance to all new employees or have a one-year minimum employment condition.

The Bottom Line

The following compensation management tips can be used to create a well-planned compensation strategy. Once you do that, there is a high possibility that your employees will be satisfied with the salaries and benefits they are receiving.

This then helps improve your employees’ personal finances, which can be one of the biggest motivators and the most effective retention technique. All in all, compensation management is one of the most important parts of your business process because your employees are the most important part of your organization. Therefore, it’s important to make sure they are satisfied.

How to Pay Off Student Loans to Improve Personal Finances

The need for a college education has been increasing over the years, which has led to more students enrolling in college, despite rising fees. This has resulted in most, if not all of the students, incurring some kind of student loan debt. While colleges and loan offering companies are very forward with offering student loans, not many of them tell you how to pay off student loans.

A number of students try and pay off student loans during their studies. However, the average loan amount can go up to $30,000 to $40,000. For post-graduate and higher studies, it may even reach over $1 million. Working to pay all that amount back can be difficult, but it can be done smoothly if you know your options.

The following are four ways on how to pay off student loans so you can focus more on your financial standing and improve your personal finances in the process.

Consolidation of Student Loans

Loan consolidation means that you combine all your current loans into one. In technical terms, you combine all of your current federal student loans into one Direct Consolidation Loan. An important factor to note is that loan consolidation only works with federal student loans and not private student loans.

Loan consolidation has no reduction effect on the interest rates or your monthly payments. Consolidating your student loans just removes any redundancies in repayments, so you don’t have to repeat the process for different repayments. Combining all your federal loans into one consolidated loan ensures that you only make one single payment.

However, your interest rate is reassessed and calculated according to the weighted average of all your current student loans, which is then rounded up to the nearest 0.125%. This means that your interest rate may even increase, to some extent.

Refinancing Your Student Loans

Refinancing student loans is one of the most popular ways to pay back your student debt. This is done by combining all of your existing private and federal loans into one single loan, which has a lower interest rate compared to the individual interest rates.

For a refinanced loan, you can choose a repayment time of between 5 to 20 years and can opt for either a fixed or variable interest rate. If you have plans to pay the loan back in the long-term, you should go for the fixed interest rate, as it will remain the same even if interest rates shoot up five to ten years later.

With refinanced loans, you will only have one student loan servicer and will have to make a single payment per month. However, to get approved for refinancing, you need to have a job, or proof of employment, work experience, a history of financial responsibility, a good income, and a strong credit score. When you do refinance your student loans, you give up your right to benefits such as deferrals and forbearance.

Make One Lump Sum Payment

If you want to get rid of your student loans quicker, and have the financial means to safely do so, you can make additional payments, on top of your regular monthly payments. Similarly, if you aren’t able to pay the monthly amount, you can choose to pay a lump sum at a later point.

You will need to contact your student loan servicer and develop a plan. You will also need to explain what your extra payments are for, and for which monthly payment.

Keep in mind that you need to improve your personal finances. Therefore, if you have any other kind of debt, such as a mortgage or credit card payments, with a higher interest rate and balance, you should focus on paying those loans back first. Or, you can contribute the funds to a retirement plan and invest it for good returns.

Increase Your Monthly Payments

Increasing your monthly payments may seem like an antithetical decision, but if you break down the pros and cons of it, you will find out that it’s one of the best decisions you can make. You can understand this better by imagining increasing your monthly payments by just $100. You will find that in the long run, this will reduce years of repayment.

The Bottom Line

Anyone in debt needs to develop a proper repayment strategy to pay back their loans effectively. Student loans are one of the most common loans today since an increasing number of people are going to college. That’s why companies are also developing employee benefits to help employees pay back their student loans.

Having a proper loan repayment strategy ensures that you have your personal finances in control. And if you understand how to pay off student loans, you can further improve not just your personal finances, but your overall quality of life.