So you’ve finished your degree, you’re going out into the working world and… suddenly you realise you have to repay your student loan. Luckily, we’ve come up with a game plan on how YOU can get debt-free ASAP!
Easy. Follow our action plan. Here are 6 steps you can take to pay off your student loan:
Step 1: Think ahead
Most student loan providers allow you to pay off the interest on your loan while you are still studying. So, if you have some time while you’re studying, it’s a good idea to get a part-time job to help you pay off the interest while you study. This would be a huge advantage and could save you thousands of rands in the long run!
Look out for available student jobs in your area, these might include:
- Babysitting, pet-sitting or house-sitting
- Shopkeeping/teller positions
- Waitron jobs
Not everyone is able to work a job at the same time as studying. In this case, the person who signed surety for you, such as your parent or guardian, might be willing to pay the monthly interest for you. Be sure to bring chocolates and lots of hugs with you when you ask this of them!
Step 2: Start paying ASAP
Once you’ve completed university, your loan provider will give you a 3-month-long grace period. You have this time to find a job and start paying back your loan. While you are on the job search grind, take some time to learn about the structure of your loan. This will give you more information on how repayments work, and how you can pay them off fastest.
If you do struggle to find a job, make sure to let your loan provider know as they can help you extend your grace period as necessary.
Step 3: Draw up a budget
Once you are earning an income, sit down and draw up a list of all your expenses. This list can be used to form a budget, or plan, for how you are going to spend your money going forward. It also helps when drawing up a timeline for your loan.
Prioritise your loan repayments, and never aim to pay off the minimum possible repayment amount. Rather cut any unnecessary spending to maximise the money that you can put towards your loan repayments.
Most importantly, a budget helps you keep track of your finances so that you can avoid building up any more debt.
Step 4: Set up debit orders
Your bank can help you set up an automatic monthly payment, known as a debit order. A debit order prevents you from forgetting your monthly loan repayment. This is important because forgetting to repay your loan could cause you to gain extra interest as a penalty. So, overall debit orders FTW!
Step 5: Consolidate and refinance
Firstly, it must be noted that this step is NOT always necessary or helpful. However, sometimes you will find that you can get a new loan that has an interest rate that is lower than the one on your student loan.
In this case, it might be beneficial for you to take out a new loan for the outstanding amount on your student loan. You could then pay off (consolidate) your student loan and then repay the new loan at a reduced interest rate.
Before you do this always make sure that the new loan will save you money in the long term! There is no point in refinancing if you will just lose money.
Step 6: In-case-it-rains money
A cash windfall is when you come into a large sum of money. This could come from the lottery, an inheritance or, even more expectedly, an income bonus or a tax rebate.
As you can imagine, a cash windfall would be a great excuse to party it up or buy yourself a new TV. However, while you still owe money towards your student loan it is important to use any large sum of money on reducing that debt.
You will thank yourself in the long run, and you can buy a new TV to celebrate once your repayments have all been made.
The man who never has enough money to pay his debts has too much of something else.
~ James Landall Basford
Prioritize your repayments and follow the 6 step game plan. Before you know it, you’ll be living the debt-free life 🙂