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The fastest way to pay off your student loans is to pay more than the minimum each month. The more you pay on your loans, the less interest you’ll owe — and the faster the balance will disappear.
Best Way To Pay Off Multiple Student Loans
You can use a student loan payment calculator to see how quickly you could get out of debt and how much money you’d save in interest. Here are seven strategies that will help you pay off your student loans even faster.
Should I Consolidate My Student Loans?
There is no penalty for paying off your student loans early or paying more than the minimum. But there’s a caveat to paying early: Student loan servicers who collect your bill can use your extra payment to bring your due date forward — by applying the extra amount to the next month’s payment.
Moving a student loan due date will not help you pay off your student loans faster. This is because your extra payment will first go towards any late fees and then accrued interest before it hits your principal. Instead, instruct your carrier—whether online, by phone, or by mail—to apply extra payments to your principal balance and keep the next month’s due date as planned.
You can make an additional payment at any time of the month or you can make a lump sum student loan payment on the due date. Either strategy can save you a lot of money.
For example, let’s say you owe $10,000 with an interest rate of 4.5%. If you pay an extra $100 each month on a standard 10-year repayment plan, you’ll be debt-free about five and a half years ahead of schedule.
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Refinancing replaces multiple student loans with a single private loan, ideally at a lower interest rate. To speed up repayment, choose a new loan term that is shorter than what is left of your current loans.
Opting for a shorter term can increase your monthly payment. But it will help you pay off your debt faster and save you money on interest.
For example, refinancing a $50,000 student loan with an 8.5% interest rate and a 10-year term at 6% interest over a seven-year term would save you about $15,000—but your monthly payment would increases by about $87.
You are a good candidate for refinancing if you have a credit score of at least 600, a solid income, and a debt-to-income ratio below 50%. You shouldn’t refinance federal student loans if you want programs like income-based repayment and public service loan forgiveness.
How To Consolidate Student Loans
Signing up for auto pay is another way to lower your student loan interest rate so more money goes toward your principal balance.
Federal student loan servicers offer a quarter-point discount on your interest rate if you let them automatically deduct payments from your bank account. Many private lenders also offer an automatic payment deduction.
The savings from this discount will likely be minimal — dropping the interest rate on a $10,000 loan from 4.5% to 4.25% would save you about $144 total, based on a 10-year repayment plan. But used with some of the strategies above, it can still help pay off student loans quickly.
A bi-weekly payment means paying half of your student loan bill every two weeks instead of making a full monthly payment.
Loan Payoff Calculator
You’ll end up making an extra payment each year, shaving time off your repayment schedule and dollars off interest costs. Use a bi-weekly student loan payment calculator to see how much time and money you can save.
The fastest way to pay off your student loans might include paying interest while in school, using auto pay, and making bi-weekly payments. If you can make extra payments towards your principal, it will speed up your debt-free date even more. You can also consider refinancing to potentially lower your interest rate and shorten your repayment term.
Yes, you can use a loan to pay off your student loans. Refinancing your student loans — trading multiple student loans for a private student loan with better terms — will likely save you more money than using a personal loan to pay off your student loans.
Federal and private student loan repayment usually begins six months after you graduate or leave school. However, you don’t have to wait to start paying.
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Yes, you can use a loan to pay off your student loans. Refinancing student loans — trading multiple student loans for a private student loan with better terms — can save you more money than using a
Unless your loans are subsidized by the federal government, interest will accrue while you’re in school, during the grace period, and during deferment and forbearance periods. This interest is compounded when repayment begins, meaning your balance grows and you’ll pay interest on a larger amount.
Consider making monthly interest payments while it accumulates to avoid compounding. Or make a lump sum interest payment before the end of the grace period or deferral. This won’t directly speed up the payment process, but it will mean a smaller balance to get rid of.
The government automatically puts federal student loans on a 10-year repayment term unless you choose otherwise. If you can’t make extra payments, the fastest way to pay off your federal loans is to stay on that standard repayment plan.
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Federal loans offer income-based repayment plans that can lower your monthly payment but also extend the repayment term to 20 or 25 years. You can also consolidate student loans, which extend repayment up to a maximum of 30 years, depending on your balance.
If you can avoid these options and stick with the standard plan, it will mean a faster path to debt-free.
If you get a raise, a student loan refinancing bonus, or some other financial windfall, try to put at least some of it toward your loans.
You can also look at your employer. Some companies pay off student loans as employee benefits. Find out if your company offers an employer student loan repayment program and ask how to sign up.
Five Questions About Save Student Loan Repayment Plan Verified
Start a side hustle to increase your income and pay off your student loans faster. Sell items such as clothing, unused gift cards or photos; rent your spare room, parking space or car; or use your skills to freelance or consult on the side.
If you need help finding extra money to put toward your student loans, consider money-saving apps like Digit and Qapital that help you save consistently with minimal effort on your part.
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Strategies To Pay Off Student Loans Fast
Student Loan Repayment Options: Find the Best Plan for You by Anna Helhoski Read More 2023-24 FAFSA Guide: How to Get Free Money for College by Anna Helhoski Read More. . In fact, student debt statistics show that 7 out of 10 college graduates have student loan debt, with the average debt just under $30,000.
If you’re like most borrowers, you probably want to find the fastest way to pay off your student loans. Paying off your loans quickly will help you save money for student debt and achieve other goals, such as buying a car or saving for retirement.
Fortunately, there are several key strategies to tackle student debt quickly. Below, we outline 12 ways to pay off your student loans fast, along with some key details on how to decide which debt to pay off first.
If you’re eager to start paying off your student loans, explore these 12 techniques to find the best way to pay off your student loans for you:
Tips For Paying Off Student Loans Fast
Paying more than the minimum and putting the extra money toward reducing your principal balance is the fastest way to become debt free.
This strategy reduces the amount remaining owed, and because interest is calculated on the remaining balance, it reduces the total interest owed.
You can set up an automatic monthly payment for more than the minimum to make sure you’re always paying a little extra. You can also take extra money you earn, such as a year-end bonus, and apply it to your loan balance. (Make sure your lender applies your payment to your principal instead of anticipating your due date.)
Refinancing involves obtaining a new loan at a lower interest rate. If you keep your payments the same or increase them but lower your interest rate, you’ll pay less interest in the long run. And a large portion of your payment will go toward reducing your principal balance with student loan refinancing.
How To Save Money And Pay Off Loans Simultaneously
You give up important federal student loan protections by refinancing, such as being able to use an income-based repayment plan and having to qualify for a new loan based on your income and credit score. However, if you’re eligible, the savings from a lower interest rate can be substantial.
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