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Topics: Student Loans |
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| Pay Down the Principle on Student Loans |
Submitted by:
Bulldog6 04/05/2009 11:54 PM
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The best way to save money on your student loan is to increase the monthly payment and put the extra money on the principle. This is true for any loan but it is especially effective for student loans.
The law requires that the life of the loan be spread out over more years than any bank would establish for a similar amount of money, but the extended life of the loan generates a tremendous amount of interest for the lender. This is how the government gets lenders to sign up for the student loan program. It is extremely lucrative.
But you can beat the high costs of student loans by paying down the principal faster than the agreement called for. It is legal and banks do not resist. After all, they want their money any way they can get it. If you examine your amortization of your loan, you will see that your monthly payment will breakdown with almost twice as much interest as principle.
Pay down that principle! Even if it's only an extra $10-20, it will save you money. |
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