2. ENROLL IN AUTOPAY
Signing up for autopay is a way to lower your student loan interest rate so that more of your money goes toward your principal balance. Federal student loan servicers offer a quarter-point interest rate discount if you let them automatically deduct payments from your bank account. Many private lenders offer an auto-pay deduction as well. The savings from this discount will likely be minimal — dropping a $10,000 loan’s interest rate from 4.50% to 4.25% would save you about $144 overall, based on a 10-year repayment plan. But when combined with some of the other strategies, it can still help you pay off student loans fast.
Contact your servicer to enroll or find out if an autopay discount is available.
3. MAKE BIWEEKLY PAYMENTS
Instead of making one full monthly student loan payment, you can pay half your bill every two weeks. This is called a “biweekly” payment. You’ll end up making an extra payment each year, shaving time off your repayment schedule and dollars off your interest costs. Use a biweekly student loan payment calculator to see how much time and money you can save. 4. PAY OFF INTEREST BEFORE IT CAPITALIZES Unless your loans are subsidized by the federal government, interest will accrue while you’re in school, during your grace period and during periods of student loan deferment and forbearance. That interest capitalizes when repayment begins, which means it is added to your principal loan amount. You’ll wind up paying interest on a larger amount, increasing the amount you pay over time. Consider making monthly interest-only student loan payments while you’re in school, during your grace period or during a forbearance to avoid capitalization. Or, make a lump-sum interest payment before your six-month student loan grace period ends. It won’t directly speed up the payoff process, but it will mean you have a smaller balance to get rid of once repayment formally begins.
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