September 15, 2021

How to Pay Off Student Loans Faster

Tips for paying off student loans faster: pay more than the required minimums, enroll in auto-pay, consider biweekly payments

6 min read

Qoins Staff

@qoinsapp

The simplest way to pay off your student loans faster is to begin making payments greater than the minimum requirements, but there are a few more tactics you can employ to get you to zero balance faster. Here's 3 strategies to get you started.

Make it a habit to pay more than the minimum

Like all types of debt, paying more than the required minimum payment will shave years off of your total pay off schedule. Even if it's $50 to $100 per month, the impact of additional payments towards debt work in reserve compound interest. Here's an example: let’s say you owe $10,000 with a 4.5% interest rate. By paying an extra $100 every month, you’d be debt-free more than five years ahead of schedule, if you were on a 10-year repayment plan. And if you're able to cut costs elsewhere, you can easily bump that number up to $200 per month and increase the speed to pay off even more. The faster you cut out debt, the more of your income you're able to keep. So don't get comfortable with the minimum payments because of the short term benefits of keeping more income, cutting out debt now will free up more money in the future when you also increase your earning power.

Enroll in Auto-Pay

If you don't want to refinance your student loans, enrolling in auto-pay could be a great tool to lower your interest rate, which in turn maximizes your contributions towards the principle each month. Federal student loan servicers offer a quarter-point interest rate discount if you let them automatically deduct payments from your bank account. Many private lenders offer an auto-pay deduction as well. This strategy will not outweigh aggressively paying over the required minimum payments, but it will give you an extra bump to speed up the process even more. By using this strategy you can have your minimum payments covered with auto-pay, and have your extra payments made each month whenever you desire. And don't forget you not be able to make an extra $500 payment each month, but even with fluctuations from $5 to $1,000 you're still making significant strides towards being #DebtFree. But remember that refinancing your student loans could be a great way to lock in a lower interest rate for your student loans, and consolidate your student loans into one payment per month.

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Make biweekly payments

Most of you might be getting paid bi-weekly, and the moment you get paid pairs greatly with the best time to make a payment towards debt. As we like to say if you don't see it you don't spend it. So the second you get your direct deposit, putting a % of that paycheck or a specific dollar amount could be a great way to pay down the student debt faster. You’ll also end up making an extra payment each year, shaving time off your repayment schedule and dollars off your interest costs. Making biweekly payments towards debt can also have significant savings in the form of interest for those debts that are compounded daily like credit cards. P.S. The Qoins app has a featured called when I get paid which allows you to choose either a dollar amount of a % of your paycheck to be automatically sent towards your loans every time you get paid.

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