How to Pay Off Student Loans Quickly
Start paying when you’re still in school., Automate your payments., Pay as much as possible each month., Increase monthly payments slowly., Make payments biweekly.
Step-by-Step Guide
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Step 1: Start paying when you’re still in school.
With most student loans you are not required to begin payments until six months after your graduate.
However, you can choose to start paying the money back even before graduation.
This would save you money in interest payments over the long run.
Try to pay at least enough to cover the amount of interest you accrue each month.
This will prevent your interest from “capitalizing” and being added to your principal balance (the total amount you owe). -
Step 2: Automate your payments.
You can set up monthly loan payments that are automatically withdrawn from your bank account.
You may even qualify for an interest-rate reduction just for setting up automatic payments.
Contact your loan servicer to see whether such benefits exist and how to set them up.
Automatic payments will also help you build and protect your credit score by preventing missed or late payments. , There is no quicker way to pay off your debt than by increasing the amount you pay each month.
Making the minimum monthly payment is an expensive way to pay off your loan(s), because it maximizes the interest you'll pay.
Not only will higher monthly payments eliminate your loans faster, you’ll also wind up paying less in interest (and thus less overall).
Even if you can afford only an extra five dollars each month, making the effort will definitely benefit you
-- and by a surprising amount.
Make sure any amount you pay above the minimum is not applied towards future payments.
Contact your loan servicer and make your intentions clear: you want your extra payments applied to the current balance. , To make it easier on your budget, start with a small addition to your payments, and gradually increase it.
Any extra payment you make above your minimum will typically save you twice that amount in interest over the life of the loan.
Consider starting with an extra $5 a month for awhile.
Once you adjust to that, maybe you'll find that you can increase it to $10 later.
The idea is to accelerate payments as much as possible over time, and you can cut out years from your loan and wind up saving yourself a lot of money.
It’s all right if you can’t consistently make increased payments.
You're not obligated to do so.
Just try to maintain as high a payment as possible, and increase it whenever you can.
Over the long term it can absolutely raise your standard of living.
The same, by the way, is true of any other loans you're paying off
-- home, auto, personal, etc.
Whenever you get a raise at work, commit part or all of it to higher payments against your debt. , If you make a loan payment every other week instead of monthly, you can significantly reduce the amount of time it takes to pay off your loan.
This is true even if each payment is only half of what you’d pay in a monthly plan.
You’ll pay less in interest, because less interest will accrue between payments.
Additionally, you’ll make 26 payments in a year rather than 12, which is the equivalent of an extra monthly payment each year.
If you are paid every other week, simply make a payment each time you receive a paycheck.
This is one of the most painless ways to pay off your debt quickly.
An added bonus is that you may receive an interest-rate reduction for setting up an automatic-payment plan. -
Step 3: Pay as much as possible each month.
-
Step 4: Increase monthly payments slowly.
-
Step 5: Make payments biweekly.
Detailed Guide
With most student loans you are not required to begin payments until six months after your graduate.
However, you can choose to start paying the money back even before graduation.
This would save you money in interest payments over the long run.
Try to pay at least enough to cover the amount of interest you accrue each month.
This will prevent your interest from “capitalizing” and being added to your principal balance (the total amount you owe).
You can set up monthly loan payments that are automatically withdrawn from your bank account.
You may even qualify for an interest-rate reduction just for setting up automatic payments.
Contact your loan servicer to see whether such benefits exist and how to set them up.
Automatic payments will also help you build and protect your credit score by preventing missed or late payments. , There is no quicker way to pay off your debt than by increasing the amount you pay each month.
Making the minimum monthly payment is an expensive way to pay off your loan(s), because it maximizes the interest you'll pay.
Not only will higher monthly payments eliminate your loans faster, you’ll also wind up paying less in interest (and thus less overall).
Even if you can afford only an extra five dollars each month, making the effort will definitely benefit you
-- and by a surprising amount.
Make sure any amount you pay above the minimum is not applied towards future payments.
Contact your loan servicer and make your intentions clear: you want your extra payments applied to the current balance. , To make it easier on your budget, start with a small addition to your payments, and gradually increase it.
Any extra payment you make above your minimum will typically save you twice that amount in interest over the life of the loan.
Consider starting with an extra $5 a month for awhile.
Once you adjust to that, maybe you'll find that you can increase it to $10 later.
The idea is to accelerate payments as much as possible over time, and you can cut out years from your loan and wind up saving yourself a lot of money.
It’s all right if you can’t consistently make increased payments.
You're not obligated to do so.
Just try to maintain as high a payment as possible, and increase it whenever you can.
Over the long term it can absolutely raise your standard of living.
The same, by the way, is true of any other loans you're paying off
-- home, auto, personal, etc.
Whenever you get a raise at work, commit part or all of it to higher payments against your debt. , If you make a loan payment every other week instead of monthly, you can significantly reduce the amount of time it takes to pay off your loan.
This is true even if each payment is only half of what you’d pay in a monthly plan.
You’ll pay less in interest, because less interest will accrue between payments.
Additionally, you’ll make 26 payments in a year rather than 12, which is the equivalent of an extra monthly payment each year.
If you are paid every other week, simply make a payment each time you receive a paycheck.
This is one of the most painless ways to pay off your debt quickly.
An added bonus is that you may receive an interest-rate reduction for setting up an automatic-payment plan.
About the Author
Donald Gonzalez
A passionate writer with expertise in creative arts topics. Loves sharing practical knowledge.
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