Most students take the maximum period allowable to pay back their student loans, with some even applying for deferments when they encounter trouble repaying them. But for some thrifty students, the idea of paying thousands of dollars in student loan interest, which is money over and above the amount you borrowed in the first place, can be unsettling.
There are a number of strategies you can employ to help you pay off student loans early, thus limiting the amount of interest you'll pay over the life of the loan. All federal loans and most private loans permit you to pay these obligations off before the end of the loan period, without penalty.
Federal student loans include a provision that allows you a grace period during which you're not required to begin repayment for a certain period after graduation. For Federal Stafford Loans, that grace period is six months, and for Federal Perkins Loans, it's nine months. If you land a post-graduation job before that grace period kicks in, why not begin paying your loan earlier than you're required to?
Remember that the interest on federal student loans accrues, or builds up, on a daily basis. So paying earlier in the monthly cycle will shave a little off your outstanding principal. You can also pay a little extra each month than you're required to do. Just make sure to note that you want it applied to the principal.
At various times, you may come into money that was completely unexpected. Perhaps you receive an inheritance from a grandparent, a bonus at work or get an unexpected tax return. Rather than spending that money, why not consider using it - or at least a portion of it - to pay student loans off more quickly? Some people also divert pay raises to paying down their student loans more quickly.
Another option to help reduce your over all student loan debt is to make interest-only payments while in school. The Citizens Bank Citizens Bank Student Loan® offers this choice as a repayment option. To learn more about our Citizens Bank student Loan® call a student loan specialist at 1-888-411-0266, and we'll help walk you through the process.