3 Ways to Pay Off Student Loans

Now that you finished school you are ready to enter the workforce. This is probably exciting for you, but a daunting transition in your life.

You are probably planning on buying a car and your first home, but you also have to pay for your student loans. There are plenty of ways to pay off your student loans to alleviate your debt and live a better financial life as you are starting out.

Here are 3 ways to pay off your student loans:

1. Make extra payment 

Make extra payment is one of the best ways you can pay off student loans faster. For example, pay the minimum payment each month, but make extra payment once every three months in the year for a total of 16 payments.

2. Pay more than the minimum payment

 You should pay more than the minimum payment each month. Paying any more than the monthly minimum payment will reduce the cost of your student loans.

For example, let’s say you have a $100,000 in student loans at a 7% interest rate with a 10-year repayment term. When you pay an extra $100 per month, you can save $4,696 in interest costs and pay off your student loans 1.08 years earlier.

3. Make a lump-sum student loan payment

 If you have extra cash from a raise, bonuses, or tax refund, you should make a lump-sum student loan payment.

For example, if you have a $100,000 in student loans at a 7% interest rate with a 10-year repayment term, making a lump-sum payment of $2,000 would save you $1,703 on your student loans and pay off your student loans 4 months earlier.