I know that personally, if I fantasize about getting a windfall of cash, the first thing I think about doing is paying off my student loans. Use a Repayment Calculator Plug the information about your loan into a repayment calculator like the one from Fin Aid.org, or use your loan servicer’s online account tools.
Learn how much you need to pay per month in order to pay off your loan within a specific amount of time.
If you’re not sure, login to the National Student Loan Data System to see if you currently have a federal loan.
IBR does have some downsides — like possibly paying more interest since you’re stretching out your loan term.
Paying back your student loans can be intimidating. It might take time, yes, and probably determination. But making that plan is just one of the things this article will help you do — and it will also give you the tools to move from having thousands of dollars of student debt to being debt-free.
I know — when I was graduating from college and trying to find work and a place to live in an entirely new city, the thought of also having loans to pay back made me terrified. You might even be able to do it faster than you expected. Let’s say you have a $30,000 loan with a 4.5% interest rate that you pay off over 20 years — you’ll pay $15,550 in interest.
But first, let’s talk about why you should try to pay your student loans off earlier than required. But if you pay it off in only 10 years, you’ll save $8,240.
If you pay it off in five years, you’ll save ,993. Or, depending on where you live, a full year or two of rent.
For most loans (except for need-based federal subsidized loans), the interest meter is running the whole time you’re in school.
When your required payments begin, the unpaid interest is “capitalized” – that is, added to your loan balance; interest then is calculated on the new larger, balance.
Psyching yourself up about it sounds silly, but it can really help.
Remind yourself what you’re paying for — a college education. It helps open career doors, and it helps you grow as a person.
According to the Federal Student Aid office, “Under IBR, your monthly payment amount will be 15 percent of your discretionary income, will never be more than the amount you would be required to pay under the Standard Repayment Plan, and may be less than under other repayment plans.” And, if “you repay under IBR for 25 years and meet certain other requirements, any remaining balance will be canceled.” This program is only for people who hold federal — not private — loans.