Going to college is an exciting time. Dreams of starting school in a new town or even one’s own hometown can be one of the best times of one’s life. Most students need some kind of financial aid in order to attend college. With the rising costs of college tuition, it has become more important than ever to have plenty of options to funding one’s college tuition and expenses.
Once a student graduates, they will need to plan a way to pay off their student loans. How can students pay off student loans faster?
There are a lot of ways students can pay off student loans faster. It just takes some planning and thinking ahead. Take a look at the following ways that some students have learned how to pay off student loans faster.
Make Extra Payments
Maybe a student cannot make extra payments every month. But just a few extra dollars paid after the monthly due date can make a big difference in the overall payment. Like a credit card, student loans gain more interest the longer a person delays payment so any payment is better than none. And a bigger payment can actually make a difference in years of interest that a person won’t have to pay if they double up now.
Timing is Important
It’s important to watch the timing in which those extra payments are made. According to the Privateloans.guru site, federal regulations require that student loan repayment is done in a certain sequence. In other words, the federal government is allowed to gain a certain amount of interest during each payment period. To make sure the extra payments are applied in the way that most benefits the payment history, send it in a couple of days immediately following a regular payment rather than right before the next due date.
Interest Only Payments
Keep in mind when learning how to pay off student loans faster, that making early payments in some cases will be applied only to the interest rather than the principal. This may result in the balance not going down as quickly as the borrower wants to see. Study the payback structure careful and get familiar with the federal regulations so every payment will be applied in the best and most efficient manner.
It is always best to pay down on the principal rather than interest-only payments because the balance on the loan will only go down when the principal is lowered.
Start a Special Tax-Free Fund to Save for the Final Payoff
Starting a savings account that is dedicated to paying off student loan balances can also help you pay off student loans faster. By dedicating a certain amount of money specifically to college debt, the balance can come down much faster than it would if regular payments only are made.