January 26, 2022

How to Repay Student Loans Early

Repayment

With the right strategy, nearly anyone can repay their student loans early All it takes is some diligence and planning to reach that particular goal. The issue that often happens is that people don’t understand how a lender applies their payment to loans. Once you do know, you’ll be able to use prepayment to free up your finances a little at a time.

The Concept of Prepayment

When a lender receives a loan payment, they first need to reduce the collection costs, late charges, and interest. From there, they’ll reduce the outstanding loan principal. Even when you think you’re paying the value of your payment for that month, there is a chance that you’re not actually hitting the principal. It poses a problem because the principal is responsible for the effect of all the other fees, especially interest.

When you’re prepaying, you are paying extra to ensure that you reduce the outstanding principal. By doing that, you reduce the interest paid over the loan's lifetime, effectively making it cheaper. It is a strategy that will save you more money in the long run.

If you’re dealing with multiple loans, the best approach is to tackle the highest interest rate loan first. Use your money to reduce its principal so that you get to save more.

Applying for Prepayment

To apply for prepayment, you first need to inform your lender of the plan. Otherwise, they may only think that the extra payment will be for the next cycle. If you don’t tell them, it is the same as paying the intended amount each month.

The prepayment method only works best for standard loans. If you are under a repayment plan, you may want to reconsider as their interest rates often fluctuate depending on your contributions.

If you’re dealing with multiple loans, you need to inform the lender about which one you’ll be prioritizing. If you don’t tell them, they might equally distribute the payment among all your loans.

Approaching a Prepayment Strategy

One of the best ways to make sure you are always prepaying is to create a habit around it. Here are some of the ways you can effectively tackle your outstanding principal:

  • Set an alternative date for prepayment: Having another payment date ensures that you are setting aside money.
  • Set a budget: Knowing where your money goes beforehand will prevent you from spending it on other things.
  • Check employer benefits: Some employers offer to match repayment or add to what you’re giving. It depends on what policies they have.
  • Begin paying while in school: Some students take part-time jobs to begin hitting their principal as early as possible. It can be very effective for subsidized loans as your payments will directly impact them.

By applying any or all of these strategies, you can begin prepaying, which sets the stage for an early fulfillment. You free your finances and then work towards your other goals.

Use Chipper for Lower Payments

Chipper can help you find a student loan repayment plan that actually fits into your budget. You simply fill out your information and link your student loan account for us to generate your options in seconds. We help the average student loan borrower save over $300 a month off their student loan monthly payment. Lowering your monthly payment plan can game changing for your personal finance and can be done in minutes! Sign up for Chipper today to get on track with your student loans.

Use Chipper for The Best Path to Forgiveness

Finding your path to student loan forgiveness is easier than ever before. Chipper helps members find better Income-Driven Repayment (IDR) plans every day. Once enrolled in an eligible repayment plan, we can help you explore your forgiveness options and understand your path towards forgiveness. Sign up with Chipper today and get on track with your student loans.

Use Chipper for Round-Ups

Paying off your student loans doesn’t have to be a long and painful journey. Round-Ups are a way to directly pay off your loans with your everyday spending! By tracking your linked spending account(s), we will calculate the rounded up amount from each transaction in a week (IE spending $4.28 would add $0.72 to the weekly amount). We then initiate a payment towards your student loan for the weekly amount. Get chipping away on your student loans with Chipper today.

Use Chipper for Public Service Loan Forgiveness (PSLF)

The Public Service Loan Forgiveness (PSLF) program was created to provide relief to borrowers aiding the public sector. Unfortunately, 30% of applicants are denied due to incorrect paperwork. We can help! Chipper was created to solve this issue by assisting borrowers in understanding their options as well as allowing forgiveness eligible users enroll into the best forgiveness program available. Sign up for Chipper today to see your student loan forgiveness options and get the forgiveness you deserve.

Use Chipper for Teacher Loan Forgiveness (TLF)

The Teacher Loan Forgiveness (TLF) program was created to enable teachers working in Title 1 schools to receive student loan forgiveness of up to $17,500 (depending on their teaching subject). Chipper has helped teachers from all over the country qualify for TLF program and can help you get the forgiveness you deserve today. Find out if you qualify for forgiveness in minutes with our employer search tool.

See How Much You Can Save with Round-Ups

Don't worry.
Be Chipper.
Get Started