Sense & Centsibility Blog
How to pay off your student loans faster
Student loans are very common these days and can take 10+ years to pay in full. Typically only mortgages take longer to pay off! And if you temporarily suspend payments or go back to school and interest accrues, your loan balances will increase...along with the pay out period. Here's what you can do to pay down your student loans faster.
Set up automatic paymentsMany servicers provide slight interest rate reductions if you enroll in 'auto-pay,' where your payments are automatically deducted monthly from your bank account. The sooner you enroll, the more money you'll save in interest (if that reduction is offered). Plus, signing up for this program guarantees on-time payments, which helps your credit score.
Don't wait to pay on your student loansIf you just graduated and you can afford to pay, you don't have to wait until your grace period ends to make payments. Interest it adds up quickly; so consider making interest only payments. This will help prevent your existing balances from increasing before you even make your first payment.
Continue paying if you go back to schoolWhile you're in school at least half time, you don't have to make student loan payments. However, just like above, continuing to make payments will help in the long run - even if it's just interest to avoid increasing your existing balance(s).
Pay extra monthlyPaying even $5 or $10/month can make a difference; it could save you several hundred dollars in interest (depending on your loan terms). The more you pay above and beyond the regular payment, the faster you'll pay off your loan. Plus you'll save money in interest.
Make a lump sum payment once per yearThis is in addition to your regular monthly payments. Use a cash windfall like a bonus, tax refund, garage sale earnings, bonus, etc. to pay down a chunk of your student loan balance.
If you need help sorting out your student loans and options, give LSS Financial Counseling a call at 888.577.2227. We'll help you navigate your student loans, options, and create a plan of action to get your overall finances on track.For more information, check out How to make spending cuts to pay down debt and What is student loan counseling?