Before creating a repayment strategy you should know your loan details, specifically current loan balances, loan program and interest rate of each loan, and how many months you have been repaying your loan.
Knowing this information can help you determine the best repayment options for your situation.
Build Your Strategy
Unlike most other kinds of debt, student loans offer a variety of repayment plans. Understanding what your repayment goals are can help you narrow down your choices and pick a plan that meets your needs.
To pay ahead, you must pay more than what you are billed. When you do this, your account will be placed in a "paid ahead status" (unless you request otherwise) which means you may receive a bill that reflects a lower monthly installment amount or even $0 due. Even if you are paid ahead, continue to pay at least your regular monthly installment amount each month if you can afford to. Doing this may allow you to pay your loans off faster or decrease the total amount you will pay over the life of your loans.
NOTE: If you wish to benefit from the Public Service Loan Forgiveness (PSLF) program, you may not want to pay ahead. If you pay ahead, you may prevent payments from qualifying and reduce the balance available for forgiveness.
Target Extra Funds
Target extra funds to loans with higher interest rates to reduce the amount of interest you will pay over the life of the loans.
When you pay more than what you are billed, you can specify how the additional funds are applied on your account. If you would like to pay as little as possible over the life of your loans or pay your loans off as quickly as possible, you should target any extra funds you are able to pay toward your highest interest rate loans.
Consolidate to combine one or more existing student loans into a single new loan. A Federal Direct Consolidation Loan may be a good option if you wish to:
- Extend your repayment period up to 30 years for the potential of a lower monthly payment amount, but understand that this may increase the total amount you will pay over the life of the loan.
- Lock into a fixed interest rate, which is calculated based on the weighted average of the interest rates on your loans you are consolidating.
- Make your federal loans that are currently ineligible for Public Service Loan Forgiveness (PSLF)* qualify.
NOTE: If you have already made payments toward PSLF on your Direct Loans, please contact us before you submit an application to consolidate your loans. If your application to consolidate includes Direct Loans, your payment counter for PSLF will restart. As a result, any payments you previously made toward your Direct Loans will be no longer count toward the PSLF program.
Direct Debit sets up an electronic deduction from your checking or savings account on your due date each month.
When your account is paid through Direct Debit, you qualify for a 0.25% interest rate reduction. This helps you lower your daily interest accrual and supports your goal to pay as little as possible over the life of the loan!