Working towards an Early Student Loan Payoff

Student loan payoff is something many students ache to achieve. Once they do, many students find themselves celebrating. Working toward an early payoff is definitely a positive thing, because the sooner the debt is repaid, the sooner students can stop stressing over it. Early repayment will also help with the establishment of a positive credit record in addition to saving money in interest, and is easier than many students may realize. Here are some tips to help in working toward an early student loan payoff.

Save Money for or Make Payments During Grace Period

Students are given a six month grace period between graduation and the time loan repayment must begin. During this time, the student will receive information pertaining to the loans, the payment and the due date. As soon as the student graduates, he or she should begin saving some form of money, even if it's just a few dollars here and there, to put toward student loan payoff. Even if the amount saved each month isn't more than $10, there is still $60 toward toward the principal that wasn't there before. If for any reason the loans are placed in forbearance or deferment, save a little bit of money to help cover the interest while payments are not being made.

Use Lump Sums of Money to Pay Down the Principal

Any lump sum of money the student gets, such as a income tax refund, should have at least a portion of it forwarded to the repayment of student loans. If possible, put everything toward it, to pay down the balances even further, and get an earlier student loan payoff. If other expenses get in the way, at least aim for a double payment. Do this once a year at tax time and though it won't be an incredibly early pay off, it will be earlier than if the once a year double payment isn't made.

Consider a Student Loan Consolidation

Generally speaking, consolidating student loans will reduce the monthly payment, because it combines them all into one loan. This will save money each month in terms of interest, making it much easier to apply more money to the principal. Those who could afford a full regular payment before consolidation should continue to pay that amount afterward to see an early student loan payoff.

Any extra money toward principal will pay the loan off sooner. Of course, the sooner the loan is paid off, the more money is saved over the long run because of interest, but even in paying the loan off a month earlier than required, money is saved. 

 


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