Best Ways To Pay Off Student Loans
Always pay at least the minimum payment
Enroll in autopay
Make extra student loan payments
This extra student loan payment calculator shows you how much money you can save when you make an extra student loan payment.
Sign up for an income-driven repayment plan
If you have federal student loans, one option is to enroll in income-driven repayment plans. If you are struggling to repay student loans, an income-driven repayment plan bases your monthly student loan payment on your discretionary income, family size and state of residence. There are four main types of income-driven repayment plans:
- Income-Based Repayment (IBR)
- Pay As You Earn (PAYE)
- Revised Pay As You Earn (REPAYE)
- Income-Contingent Repayment (ICR)
If you make full, on-time monthly payments for 20 years (undergraduate student loans) or 25 years (graduate student loans), you could receive student loan forgiveness.
Refinance student loans
Student loan refinancing helps you get a lower interest rate, save money and pay off student loans faster. You can refinance federal student loans, private student loans or both. With student loan refinancing, you can choose a fixed or variable interest rate as well as your loan term, which can range from five to 20 years. A lower interest rate means you can save money on interest. To qualify, you need a credit score of at least 650, recurring monthly income and enough cash flow for living expenses and debt repayment.
This student loan refinancing calculator shows you how much money you can save with student loan refinancing.
Pay off your highest interest rate loans first
After you make your minimum monthly payment, you can make an extra payment on your highest interest rate loan. Why? Don’t focus on your loan balance; focus on you interest rate. Your goal should be to pay off the highest interest rate loan first to limit the accrual of interest.
Pay off your smallest student loan balance first
With this strategy, start by making the minimum monthly payment. As an alternative to paying off the highest interest rate loan first, you could pay off your smallest student loan balance first. Why? Pay off the smallest balance first to build momentum. Start with the smallest loan balance, and once you pay it off, you can move to repay the next highest student loan balance. Continue to build more momentum as you pay off each loan.
Use extra cash to pay off student loans
If you have any extra cash – from a bonus, tax refund, inheritance or any other sources – consider making a lump-sum student loan payment.
Make payments while in school
Get ahead of your student loan payments while you’re in school. Unsubsidized student loans begin to accrue interest while you’re in school. You’re not required to make student loan payments while you’re in school. However, if you are able to start making payments while you’re a student, consider making payments of any amount to reduce principal and save money on interest.