Get Out of Student Loan Debt: Make Additional Payments

Start Making Payments in College

Most borrowers wait until six months after graduation to begin repayment. While this is a standard approach, it can be costly. Why? Because interest accrues while you’re in school, even if you’re not required to make payments.

Paying just the interest during college can prevent it from capitalizing later. Even small monthly payments can save you hundreds—or even thousands—over time.

To start, identify how much interest each of your loans accrues yearly. Divide that number by 12 to find your monthly interest amount. Do this for each loan and add the totals. That’s how much you should try to pay monthly if you want to cover interest while still in school.

Student Loan Payment Strategies

If you have multiple student loans, choosing the right debt repayment strategy can accelerate your progress. Two of the most effective methods are the avalanche method and the snowball method.

Avalanche Method

The avalanche method targets the loan with the highest interest rate first. By paying more toward that loan and the minimum on others, you reduce the total interest paid across all your loans.

Snowball Method

Once you’ve paid off your highest-interest loan, you can use the snowball strategy. Continue making the same monthly payment, but now apply it to your next loan. This creates momentum, helps eliminate debt faster, and minimizes total interest.

Tell Loan Servicers How to Apply Extra Payments

Making extra payments is smart—but it’s crucial to ensure those payments are applied correctly. Loan servicers may automatically use extra funds to future payments instead of your principal balance, which doesn’t help reduce interest.

To avoid this, contact your loan servicer and provide instructions. Request that extra payments go toward the principal of the highest-interest loan.

Whenever possible, communicate via email or your online loan portal. This keeps everything in writing in case of future disputes.

Get Out of Student Loan Debt with a Plan

The best way to eliminate student loan debt is by creating a strategy that includes making additional payments, understanding your loan terms, and choosing the best repayment method for your financial situation.

If you have questions or need help creating a loan repayment plan, Hope Credit is here to assist. Our professionals can help you explore every available option to reduce debt faster and smarter.

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Sources: Nagle, Courtney. (2018, October 24). 6 Tips to Make Extra Student Loan Payments Correctly. Retrieved from US News