Over a standard 10-year repayment period, you'd make monthly payments of $348. If you instead make $174 payments every two weeks, you'd be debt-free 13 months sooner and save $1,422 in interest. In this example, you'd end up paying $4,524 per year on a biweekly schedule instead of $4,176 on a monthly schedule.
Best repayment option: standard repayment. On the standard student loan repayment plan, you make equal monthly payments for 10 years. If you can afford the standard plan, you'll pay less in interest and pay off your loans faster than you would on other federal repayment plans.
Bottom line. If done right, making biweekly mortgage payments leads to less interest paid over the life of your loan, saving you money and whittling your balance down sooner. However, you must confirm that the extra payments are being applied to the principal and that you're not subject to prepayment penalties.
Yes. You can make payments before they are due or pay more than the amount due each month. Paying more than your required monthly payment can reduce the amount of interest you pay, and total loan cost over the life of the loan. Was this page helpful?
The fastest way to pay off your student loans is to increase your monthly payment. Decreasing your spending and increasing your income will help you pay more than your minimum payment. Refinancing your student loans may help—but it's not for everyone. Income-driven repayment plans are not your best option.
The quickest way to pay off student loans is to make more than the minimum payment each month. Any extra amount you can apply toward your loan balance will help reduce the amount you owe, and the total interest you'll pay. When you make an extra payment, be sure to ask your servicer to apply it to the loan principal.
Ideally, you want your extra payments to go towards the principal amount. However, many lenders will apply the extra payments to any interest accrued since your last payment and then apply anything left over to the principal amount. Other times, lenders may apply extra funds to next month's payment.
There are many benefits to paying off your student debt early. You will save on student loan interest and get out of debt faster while improving your debt-to-income (DTI) ratio. With a higher DTI ratio and more disposable income, you could pursue other financial goals, such as buying a house or saving for retirement.
You'll save time and interest if you can pay off your student loans in one lump sum. But before you do, consider financial goals that may take higher priority — like building up an emergency fund or beefing up retirement savings.
Paying off your student loan can take years and cost thousands of dollars in interest. If you can adjust your budget and make 26 biweekly payments instead of 12 monthly payments, you'll be able to pay your loan off faster and save hundreds of dollars in interest.
Biweekly payments are a mortgage payment option that can allow you to make an extra full payment each year. This can help you pay off your mortgage earlier and reduce the amount you pay in interest in the long run by thousands of dollars.
Making biweekly mortgage payments can shave years off your loan and save you thousands of dollars in interest. Before you follow this strategy, check with your lender to ensure it allows biweekly payments and will credit you appropriately for your payments.
The good news is that student loan payments don't have to go on forever. If you have federal student loans and are making payments under an income-driven repayment (IDR) plan, you may be able to have your loans forgiven after 20 years.
The remaining unpaid balance of loans is forgiven after 25 years. Income-Based Repayment (IBR)—Depending on when you first took out loans (before or on or after July 1, 2014), payments are generally 10% or 15% of the borrower's discretionary income, but never more than the 10-year Standard repayment plan amount.
Paying off student loans early should come second to having an emergency fund and retirement savings. You lose the opportunity to get some of your balance forgiven through a student loan forgiveness program if you pay off your loans early.
In the good debt versus bad debt debate, student loans fall into a gray area. They can be considered good debt because the money you're borrowing to attend school is your ticket to earning a degree and getting hired at a well-paying job. That debt should pay itself off over time with a lucrative career in place.
Since your interest is calculated on your remaining loan balance, making additional principal payments every month will significantly reduce your interest payments over the life of the loan. By paying more principal each month, you incrementally lower the principal balance and interest charged on it.
But if the choice is between chipping away at your outstanding mortgage by making monthly overpayments – which reduces the amount of interest you pay – and waiting until the end of the year to bring down your mortgage balance, I would say monthly overpayments would be more beneficial.