When you initially receive your student loans, oftentimes you are assigned or you select a payment plan from the very beginning. Then, once your education is complete, your payments may last for many years. The good news is, you can change your repayment plan at any time — for free.
Whether you want to change your student loan repaying plan or you want to stick with the original plan, there are countless ways to repay your student loans with as little interest as possible. Learn about available student loan repayment options so you can find a plan that best suits you.
You can repay undergraduate and graduate student loans with repayment plans, whether the loans are private or federal. Making extra payments will help pay off your loan faster, but refinancing your loan is also an option. By refinancing the loan, you can get a shorter loan and save money on interest.
Making extra payments
You can always make additional payments towards your student loans, and prepay your monthly dues, for no extra cost. You can make multiple small payments throughout the month, or you can do one larger payment on the day your fees are due. Either way, the more you pay each month, the more money you save.
For example: Imagine you owe $10,000, your interest rate is 4.5%, and you are on a 10-year repayment plan. If you pay an additional $100 each month, you will pay off your debt 5 years ahead of schedule.
Refinancing your student loan
If you have good credit and a reliable job, refinancing your student loan may be the best repayment option for you. Doing this will help you pay off your loan fast, without having to make additional payments.
To refinance, you can combine multiple student loans into a single, private loan at a lower interest rate. So, by choosing a new loan term that’s shorter than the one you initially received, and increasing your monthly payment amount, you can save thousands of dollars.
For example: If you have three loans that equal $50,000 with an 8.5% interest rate, you can combine those loans into one, single loan with a 4.5% interest rate. By doing this, you will save around $13,000 and finish paying your loan two years faster.