When it comes to availing a student loan in the United States, there is a one-time origination fee to be paid. After that, just like any other loan, the interest and principal amount will have to be repaid. The principal payments go towards repaying the amount you have been loaned whereas the interest payments are the agreed percentage of the amount you owe, set between you and your loan provider before acquiring the loan amount. Now, if you have defaulted on making repayments, the interest will be added to your total debt.
The United States Federal Government has special initiatives to help students pay for their college education by offering various loan programs that come with much more beneficial terms and conditions when compared to private lenders. The main advantage of this initiative is that as long as you are a student, your payments will be deferred. Federal student loans are subsidized in nature and do not accumulate interest during the period of deferment.
Before you avail a student loan, make a structured student loan repayment plan to check if you can comfortably make the monthly repayments. There are student loan payoff calculators that can assist you in the quickest way to reduce your student loan balance.
What are Student Loan Payoff Calculators?
If you have obtained a student loan and are looking to pay off the loan amount at a faster pace, you can make extra payments when possible. This will cut down your total interest due. By using a student loan payoff calculator, you can determine the month or years it will take you to complete the repayment plan. However, the following information will be required.
- The total loan amount of your student loan.
- The interest rate of the loan.
- The expected amount of monthly payments on the loan term.
Once the above information is obtained, you can input the figures into the corresponding fields. Click on ‘Calculate’ and the student loan payoff results will be generated. The total amount of interest owed on the loan balance once it has been paid will also be displayed.
Other Methods to Payoff Student Loans Faster
When using a student loan payoff calculator, you can precisely keep track of your loan repayment cycle and monitor its progress. There are other methods you can try, as listed below.
Refinancing Your Student Loans
When refinancing a loan, your existing loan will get replaced with another loan that is less expensive to repay. The loan applicant gets to renegotiate the terms of the loan such as a lower interest rate.
Automating Student Loan Payments
There are many loan providers that offer discounted rates of interest for people who use the automating payments feature. When you have authorized your bank to make automatic payments, your monthly loan amount to be paid will be deducted automatically from your bank account. By using this option, you can cut down on the expenses incurred on your student loan payments.
Make Use of Financial Windfalls
When you receive money through an inheritance, a legal settlement, winnings or as a gift, it is referred to as financial windfall. If you happen to get a sum of money, make sure it goes towards the repayment of your loan. By doing so, the interest you pay at the end of your loan tenure will be reduced and you will end up paying less in your monthly installments.
How to Refinance Student Loans?
The main objective of refinancing student loans is to let the student replace their existing education loan with a new loan which is lower in cost. The eligibility criteria to refinance student loans are as follows.
- A credit score of at least 600 or above.
- A steady source of income.
- A qualified co-signer (if you do not have a steady income).
Both Federal loans and private loans can be refinanced. By getting your existing loan refinanced you can reduce the monthly payments which in turn, will see you repay your debt faster.
The Benefits of Refinancing Student Loans
Many loan providers will caution you about the risks of refinance student loans, make sure that you have enough emergency savings and are financially stable before you carry out with the refinancing process.
Refinancing student loans can aid you to faster reach your objectives that are listed as follows.
- To pay less in interest over the lifecycle of the loan.
- To repay your existing education debt much faster.
- To reduce the monthly student loan repayments.
- To release a co-signer.
What Occurs When a Loan is Refinanced?
When a student loan is refinanced, a private lender pays the existing debt and replaces the student loan with another one. This new loan will come with a new interest rate and repayment cycle. Once this is done, you will have to make regular monthly payments to the new lender.
Do Adequate Research on Lenders
Most student loans refinance lenders are quite similar, make sure you look for certain factors depending on your current situation such as if the lender in question offers to refinance on Parent Plus loans in their child’s name or if the lender requires a college degree to start the refinancing process.
Get an Estimate on Multiple Rates
After you have zeroed in on the top 5 refinance lenders that are best suited for you, ensure that you check and compare rate estimates from all of them before you proceed to go with the one that is offering the lowest rate.
