—the plan that federal student loans automatically go on if you don’t choose an alternative—spans 10 years, but some options stretch payoff over 20, 25 or even 30 years. If you don’t want debt hanging over your head for a decade or longer, and you can make some room in your budget, there are strategies for paying it off faster.
Use a student loan calculator to see how additional payments could impact your repayment schedule and interest charges. Let’s say, for instance, that you owe $15,000 in student loans at a 5.5% interest rate, the current rate for federal Direct subsidized and unsubsidized loans for undergraduates. If you’re going to make extra payments, instruct your loan servicer to apply them to your principal balance. Without this instruction, your servicer may save the payment for a future date, which wouldn’t help you pay off student loans faster.