With the rate of interest on student loans set to double by 2022, student loan borrowers are increasingly concerned that they’re paying more than they should.
If you’re one of the lucky few who’s currently on the hook for $1,200+ per month, there are a few things you can do to keep your monthly payments in check.1.
Pay down your student loans as quickly as possible.
For most borrowers, refinancing a student loan in the early stages of repayment can help pay off the balance in the first few years.
In the case of an older student, you can even borrow the principal amount to pay off your student debt and then use the remaining balance to buy a home or car.
If all goes well, the principal will be wiped out and you’ll have a fresh $1.20/month to pay for your mortgage, car payments, or any other loan payments you need.2.
Take advantage of a discount student loan calculator.
There are several free student loan calculators available for free, so it’s easy to compare interest rates on your current loan.
However, you should also check out the Student Loan Interest Rate Comparison tool on the College Board’s website.
This tool shows you the interest rates available for a given amount of money and what percentage of that amount is paid in interest per month.3.
Use a budgeting tool.
It’s hard to be certain how much your monthly payment is, so you can use a budget tool to determine how much money you can expect to save over the next year.
The best budgeting tools are free online calculators that are designed to help you set aside a certain amount each month for expenses.
For example, you might set aside $20 each month to buy new clothes, groceries, or other necessities.
If your budgeting software gives you a monthly breakdown, you’ll know how much of your income you can save each month.4.
Pay off the loan on time.
With interest rates set to triple by 2022 and the likelihood that interest will double on your payments, you probably won’t want to keep making monthly payments on your loans.
You’ll want to save those funds for the down payment, so make sure you’re taking action on the plan you’re on before the rate goes up.5.
Don’t wait to pay down your loan.
You may be surprised to learn that if you delay making payments on a student debt, it could take up to three years before your monthly principal is fully repaid.
As the interest rate on your debt goes up, you may need to make additional payments or refinance the loan, all of which can make it difficult to make your monthly monthly payment.
If you’re concerned about your student lender’s interest rates and want to get a better handle on the amount of interest you’re getting on your loan, you could try a free student lending calculator from the College Bank.
The College Bank also offers a student rate comparison tool that helps you determine which interest rate is best for your budget.
The most important thing you can take away from this article is that it’s best to pay your student lenders your principal and interest on time, and you shouldn’t wait until the interest is due.
If, however, you are still unsure about how much interest you’ll be paying, consider applying for a loan that has a fixed rate of rate.
This can help you pay off a lower amount of your debt before it hits a higher rate.