Student loans are designed to help students to pay off their tuition fees. Compared with other types of loans, student loans can come with low-interest rates and have the option of deferred repayment. Interestingly, the amount for student loans varies greatly. It depends on different factors, whether they are federal or private loans and the student’s grade. Undergraduate students can borrow up to $12,500 per year and $57,500 total. Graduates are allowed to borrow up to $20,500 annually and $138,500 total.
The Recommended Way of Covering Student Loans
Yes, repaying the student loan can appear overwhelming. However, certain steps should be followed to alleviate the burden of paying the debt back. Here are the most common steps recommended by experts to help students cover their loans:
- Making a budget. It is said that a zero-based monthly budget shows where your money is going and where the students can cut back. This should be the first step of trying to repay the loan.
- Cutting down expenses. Students should see where they can cut down their expenses and what extra stuff they live with that they can do without.
- Paying more than appointed. That is true; if the student can pay more than the minimum amount of monthly repayment, he can cover the debt even faster.
- Using tools for calculation. To see how much the student can save on APRs by making extra payments, he should use Student Loan Payoff Calculator.
- Refinancing. Replacing an existing loan with a new, lower-cost loan through a private lender is called refinancing. It will reduce monthly payments and help to pay off the debt quicker.
A New Way-out Solution to Cover Student Loans
Imagine, nowadays, there is an excellent option of covering your student loan without money. The government suggests covering student loans by volunteering. There are some platforms such as Peace Corps, AmeriCorps, Teach for America, where the students can do volunteering and cover their education loans.
Volunteering activities can help you to get rid of your student loans faster. Participating in volunteering services is an excellent way to cover your loans and do something good for your community. It is also a great means of pursuing a career in public service.
Activist and director to “Campaign for Female Education” Association Angie Murimirwa shares how social interest economic tool can stimulate communities once being in a cycle of poverty. She mentions, “Social interest is a way to pay back interest on a loan through service rather than dollars.” She brings examples of sub-Saharan communities and suggests that this model can be duplicated anywhere with lasting effects. Angie’s talk shows how to gain access to finance, paying forward their interest in service through a new lending approach called “social interest.”
This TED talk can guide how to start thinking of covering our student loans by doing social work or volunteering. This is a way of feeling both psychologically and financially satisfied.