The big day has finally come and gone, college graduation! You've entered the working world, but student loans are now at the forefront of your finances. Have you made paying off these loans a priority?
It’s easy to just keep making the minimum payment every month, but do you really want to keep doing that for the next 20 years or more? Think about the big picture, making paying off student loans a priority means paying less interest over time and paying it off sooner, freeing up your finances for something else that is important to you.
One way to start tackling your student loans is to increase your monthly payment. If you’re able to, budget a little more towards your loan and pay more than the minimum. If that’s not always an option, keep making your payments as is, but make an extra payment whenever you have a little extra money at the end of the month. Either of these options will help you pay off the loan sooner and decrease the amount of interest you end up paying in the long run. Be sure to specify that you’d like your extra payment applied towards the principle portion of your loan, NOT the interest.
Take a look at the sample scenario below to see how quickly the savings add up!
Student Loan Balance: $50,000
Interest Rate: 3.76%
Loan Term: 10 years
|Making Minimum Payments||Pay $100 extra per month||Pay $150 extra per month|
|Term of Loan Decreases by||None||1.9 years||2.6 years|
(you’re actually paying a total of $10,565.66 in interest)
All figures for this sample scenario are for illustrative purposes only and were calculated using a Financial Aid Repayment Calculator.