How To Pay Down Your Student Loans Faster
If you want to get out of student loan debt but arent ready to fully pay off your loan, you can do it by paying a little extra each month. Making extra payments, along with your regular monthly payments, may reduce the total amount you pay for your loan or help pay your student loan off faster.
You dont need to make an extra payment every single month to pay down your student loan fasterdo it whenever your budget allows. The easiest way to do this is to make a online, by phone, or by mail.
Paying extra will also reduce the Current Amount Due shown on your next billing statement. Even if theres no required amount due on the billing statement, continuing to make payments will reduce your Total Loan Cost.
Note: If youre enrolled in auto debit or have requested the pay-ahead feature for your loans to be turned off, the Current Amount Due will not be reduced in the following billing period.
Examples Of Paying More Every Month
Assume you have a student loan with a Current Balance of $10,000, at an interest rate of 8.0%, and a repayment term of 10 years.
If you pay your amount due every month
- Youll make 119 monthly payments of $121.32, with a final payment of $119.89.
- Youll pay off your student loan in 10 years and youll pay a total of $14,556.97.
If you pay an extra $20 a month
- Youll make 96 monthly payments of $141.32 with a final payment of $7.10.
- Youll pay off your student loan in 8 years and one monthalmost 2 years earlier than with the standard repayment term and youll save $983.15.
Interest Rates On Student Loans Vs Personal Loans
Interest rates for personal loans can sometimes be lower than interest rates on private student loans , but not always. The only time you’ll actually save money by using a personal loan to pay off your student loans is if you’re definitely receiving a lower interest rate on the loan.
Some lenders have tools you can use to estimate what loans you qualify for and what your interest rate is likely to be. Prosper Personal Loan, for example, has a rate tool that can show you how much you’ll qualify for, what your monthly payments will look like and how much you’ll pay in interest, all without hurting your credit score. This can help you get a preview of what’s to come if you do decide to submit an application.
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5% of monthly payment amount or $15, whichever is greater
Terms apply.
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How To Pay Off A Sallie Mae Private Loan At Once
Hi all!
I’m planning to pay off a $4500 private student loan from Sallie Mae in a few month when i have the money, I’m still in school, it will be way before the repayment starts, but I want to get it out of the way. I saw on their facebook of all the horror story about people getting screwed by Sallie Mae when they send in a complete payment, Not sure if they are all true, but I better be careful, after all Sallie Mae control their private loan rules.
I know they have the website as a way to pay your loan, but to avoid their tricks can someone with eperience dealing with them give me some advices?
Also will my cosigner be required to do anything?
Sallie Mae Private Loan Issues
For starters, Sallie Maes private loans suffer from the same disadvantages that apply to all private lenders.
Even though the government loans may have a higher interest rate, Federal government loans are still a better alternative for most students, largely because the Federal loans have the most forgiving repayment plans. Therefore, students should first maximize FAFSA funds prior to selecting any private loan.
Borrowers should also be very careful about getting co-signers involved with their student loans. Sallie Mae claims that 88% of their borrowers have co-signers.
Sallie Mae recently took some heat from the government and in the press for the practice of auto-defaults. In cases where the co-signer dies or declares bankruptcy, Sallie Mae has the ability to automatically place the loan in default status. Sallie Mae does claim to have a cosigner release policy, but we have found these policies to not be of much use in real life. This is because lenders like Sallie Mae require the borrower to be independently creditworthy in addition to other requirements at the time of the cosigner release application. Because Sallie Mae has no incentive to actually release the cosigner from the loan, many are denied. We suggest that borrowers and cosigners never plan on a release. If they do want a release, this guide should help get it done with relative ease.
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Before You Sign With Sallie Mae
Before choosing Sallie Mae, or any other student loan lender, be sure youve done your homework. Its important to compare rates, terms, and repayment options. College Raptor can help you do just that! With our freeStudent Loan Finder, you can compare lenders and rates side by side so you can find the ideal student loan for you.
See Sallie Mae Loans® for Important Disclosures
- Compare pre-qualified rates from up to 7 lenders
- 1.04% starting APR on variable loans with auto-debit
- 3.34% starting APR on fixed loans with auto-debit
- 520 year terms available
- Standard, deferred and interest-only repayment plans available
- Borrow up to 100% of your schools cost of attendance
Disclosures
Be advised that the owner of this website may receive a referral fee from its advertising partners.
Electronic Check Conversion Notice
When you provide a check as payment, you authorize us to either use information from your check to make a one-time electronic funds transfer from your account or to process the payment as a check transaction. When we use information from your check to make an electronic fund transfer, funds may be withdrawn from your account as soon as the same day we receive your payment, and you will not receive your check back from your financial institution.
Deposit products offered by Wells Fargo Bank, N.A. Member FDIC.
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Pros And Cons Of Paying Off Student Loans Early
When deciding whether to pay off your loans early or not, consider the following advantages and drawbacks:
Pros
- You can reduce your debt-to-income ratio: When you get rid of your loans, you lower your debt-to-income ratio. That change can improve your credit and free up money in your monthly budget.
- Less interest will accrue: By accelerating your repayment, less interest can accrue on your loans, saving you money on the overall cost of the loan.
- Youll reduce your financial stress: Paying off your loans can give you an incredible sense of achievement and it can lower your financial stress. If your debt has been weighing you down, paying your loans off ahead of schedule can be emotionally freeing.
Cons
How Does A Sallie Mae Loan Work
Sallie MaeloansloanloansSallie Mae
After certification is received, Sallie Mae disburses the loan. Most educational institutions use the funds received to pay for tuition or other costs that build up over the loan approval waiting period. Schools normally have 14 days to apply the money to a student’s account.
Also Know, do Sallie Mae loans qualify for loan forgiveness? Sallie Mae loans issued by SLM Corporation cannot be forgiven. As of 2017, there is no option for private student loan forgiveness, but there are options for public student loan forgiveness.
People also ask, is Sallie Mae a good loan?
Sallie Mae’s undergraduate private student loans are best for those who want flexibility with repayment. For example, Sallie Mae offers lower interest rates to borrowers who make monthly $25 payments or interest-only payments while in school.
How do I get a loan from Sallie Mae?
Follow these instructions to apply for a private student loan: Go to the lender’s website. Check the interest rate of the loan, along with the flexibility of repayment options and other benefits. Apply directly on the website.
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A Milestone To Celebrate
Making your final student loan payment probably won’t be a seismic event for your credit score, but it is a milestone to celebrate. It marks a dividing line between one phase of your life and another. In the first phase, hopefully you repaid your loan responsibly and used it to help build good credit over time. In this next phase, you can make new choices on how to spend and save your money, track and improve your credit, and reach new financial goals. Good news, indeed.
How To Hack Sallie Mae Student Loan Payments
How Student Loan Hero Gets Paid
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Student Loan Hero Advertiser Disclosure
Student Loan Hero is an advertising-supported comparison service. The site features products from our partners as well as institutions which are not advertising partners. While we make an effort to include the best deals available to the general public, we make no warranty that such information represents all available products.
Editorial Note: This content is not provided or commissioned by any financial institution. Any opinions, analyses, reviews or recommendations expressed in this article are those of the authors alone, and may not have been reviewed, approved or otherwise endorsed by the financial institution.
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Can My Loans Be Forgiven
Federal student loans may be eligible for certain forgiveness programs, depending on your profession.
As described above, if you have an IBR plan, any balance remaining after 10 years will be forgiven if you spend those years in a public service sector such as the military, public education, or police work or work for certain nonprofit 501 organizations.
You can have up to $17,500 in loans forgiven if you teach in a low-income area for five years.
If you ever find yourself struggling with student loans, keep in mind that you always have options. Dont wait until youve missed several payments or have already defaulted on your loans get help as soon as possible to create a plan that works for you and your budget.
Meanwhile, keep an eye on Washington.
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Should I Worry About Prepayment Penalties With Student Debt
The good news for student loan borrowers who are ready for aggressive debt elimination is that prepayment penalties should not be a concern.
The federal government does not charge any fees for paying off student loans early. Additionally, private student loan lenders have not been allowed to charge prepayment fees since 2008. prohibits lenders from imposing a fee or penalty on a borrower for early repayment or prepayment of any private education loan.)
Thus, lenders cannot penalize borrowers who want to attack their student loans.
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Pay More Than The Minimum Payment
Youve probably heard this one before. If youre only paying the minimum payment each month, youre not getting anywhere fast. You might not even be breaking even with the interest youre piling up! By making larger payments, youll be able to attack the amount you owe at a quicker rate. Start playing around with that Student Loan Payoff Calculator to figure out how fast you can pay off your loans by making extra payments.
Heres an example:
- Lets say you have the typical amount of student loan debt that the average student graduates with, which is $38,792.1
- With a 5.8% interest rate and a 10-year loan term , youd be looking at a minimum monthly payment of $426.78.2
- Because of interest, your total repayment amount would be $51,489thats $12,697 more than your original loan! Yikes. That blows.
- But lets say you decided to pay just 20% more than your minimum payment each month . That would put your monthly payment at $512.14which means youd pay off your entire loan in about eight years and save $2,794.04 in interest ! Thats more like it.
- If you paid over 20% more than your minimum payment each month, youd pay off your loan even faster . You get the picture!
All that said, if youre having trouble even making the minimum payment each month, you might think the idea of paying more money is a pipe dream. With that in mind . . .
Make Strategic Extra Payments
When you make an additional payment, Sallie Mae first applies it to unpaid fees, then to unpaid interest. Next, any remaining amount is applied to the current balance. Unless directed otherwise, the extra payment will go toward your next payment due. To speed up your repayment, contact the company and ask it to count it as an extra payment, rather than reducing your next payment.
Measure the effect of this move using our lump sum extra payment calculator.
And you dont have to worry about a Sallie Mae prepayment penalty: The lender doesnt charge one.
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Does Paying Off Student Loans Early Help Your Credit
If youre working on building your credit, you might be worried about the impact on your credit score paying off student loans early may have. But does paying off a loan early hurt your credit score?
You dont need to worry paying off your debt is a good thing. While your score might dip a little at first, your score will rebound. Changes in your credit score for paying off student loans early are usually temporary.
When you pay off a loan ahead of its scheduled end date, the lender will notify the credit bureaus that the loan was paid in full. Thats a big positive to lenders that review your credit report it shows that you honored your loan agreement and were able to pay it off. Eliminating your loans also improves your debt-to-income ratio or the amount of debt payments you have relative to your income. This will all help your credit profile in the long term.
However, one factor that affects your credit score is your credit mix it makes up 10% of your score. Lenders like to see that you have multiple types of credit, such as revolving accounts and installment loans.
If you dont have any other installment loans such as car loans or personal loans your score might drop slightly when you pay off your student loans because you dont have as strong of a credit mix.
Sallie Mae Parent Loan
The Sallie Mae Parent Loan is for parents who want to financially support their students undergraduate, graduate, or certification education. It also comes with its own set of benefits, including:
- 100% coverage for all school-certified expenses
- No origination fee
- 0.25% interest rate reduction if you enroll with auto-debit
- May qualify for tax deductions on the interest paid
- Track your credit health for free online with FICO Credit Scores
Sallie Mae offers two repayment plan options for their Parent Loan:
Interest Repayment Plan: Pay interest monthly while your student is in school and start making principal and remaining interest payments upon the students graduation. Note that this option will take longer to repay compared to the Principal and Interest Repayment Plan, but the trade-off benefit is that your monthly payments will be lower while the student is enrolled.
Principal and Interest Repayment Plan: Start repaying the principal and interest right away while the student is still in school. This plan will let parents repay the loan faster and costs less overall, but the in-school monthly payments will be higher compared to the monthly payments of the Interest Repayment Plan.
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Repaying Your Student Loans
There are many benefits of paying off student loans early you can save a lot of money, reduce your stress, and improve your debt-to-income ratio. However, it doesnt make sense for everyone to pay off their loans before their repayment terms end, so review your finances and your goals to see if its the best choice for you.
Thinking about refinancing to accelerate your repayment? to see how much you can save and how much faster you can become debt-free.
Late Student Loan Payments
You may be charged a late fee if you dont pay your loans Current Amount Due within 15 days after the Current Amount Due Date. The late fee amount is listed on your loans Disclosure and your billing statement.
If your student loan payments are late, you may also lose your eligibility for borrower benefits or repayment incentives. Late payments may also be reported to consumer reporting agencies, which could negatively impact your credit report.
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What Fees Does Wells Fargo Charge On Student Loans
We do not charge any fees on student loans. This means, for example, that we do not charge application fees, origination fees, late fees, pay by phone fees, prepayment fees, and return check fees. We do charge interest. For information regarding interest, see How payments are applied and how interest is calculated.
