Whether you’re in school or out, it’s smart to consider paying off your student loans as early as you can. It might sound like a lot, but paying a little more today, maybe by using extra cash from your monthly budget, tax refunds or bonuses, could benefit you for the rest of your life down the road. And with no prepayment penalties, there’s no reason not to pay a little extra when you can. Here are some strategies to help you pay off your loan early and reduce the total cost of borrowing.
Strategies While Still in School
Chip away at that interest
If you can afford it, start paying the interest on your student loans while you’re in school or during your grace period. You’ll reduce the amount of your loan by the time you begin repayment.
Don’t wait until you graduate
Just because you’re not obligated to start paying until after you leave school, doesn’t mean you have to wait. Extra payments can help reduce your total cost of borrowing.
Know what you owe
Paying extra gives you a better understanding of what you actually owe, keeping you free from any unwelcomed surprises after graduation.
Build better credit
Early repayment can help improve your credit score so you can be in a better position to borrow money in the future.
Strategies After Graduation
Make extra payments when you can
Paying a little extra each month can significantly reduce the total cost of your student loan.
Pay off early
If you have the resources, it might make sense to put extra money to work by paying off your entire balance early.
Know what you owe
Paying extra gives you a better understanding of what you actually owe, and helps you create a budget that includes your student loans.
Pay on time
It’s important to make payments on time to build your credit history. Delinquency and default can negatively affect your position to borrow money in the future.