For Student Loans, Use That Calculator
Via MiamiHerald.com, Posted on Thu, Mar. 13, 2008:
If you were still living like a student when you last determined your monthly student loan payments, it’s time to review things.
Call your loan servicer or try an online calculator to determine how much more it would cost — and, in the long term, save — you per month if you shaved a few months, or even years, off your repayment schedule.
The average U.S. student loan balance is around $19,000. At an interest rate of 6.5 percent, paying $160 a month would set the repayment end date at 15 years. But bumping your payment up to $200 a month could trim up to four years off the life of your loan — and save you $3,000 in interest. Food for thought . . . .
Great suggestion, especially if you’re now in the workforce and earning money. You may not be ready to pay off your student loans altogether, but by increasing your monthly payments a bit you could pay off the loan much earlier and actually save a lot of money in the process.
Why? Because the extra that you pay each month goes purely to pay down the principal (the amount you owe on the loan), rather than simply servicing the interest on the loan.