When it comes to paying off student loans, most borrowers opt for the simplest option: regular monthly payments, often deducted automatically from a bank account. However, you’re not limited to the standard payment schedule. If you choose to make payments on your student loans biweekly instead of once a month, you’ll pay off your loans faster and save money in the process.
Why biweekly payments help you pay off student loans faster
When you make biweekly payments on your student loans, you are choosing to make 26 half-payments instead of the 12 monthly payments you would normally make. With 26 half-payments made over the course of a year, you wind up making one extra full payment on your student loan every 12 months.
How much you can save with this method depends on how much you owe, your current payment and your current student loan interest rate. However, the following example can give you a general idea.
Let’s say you borrow $36,000 in Direct Unsubsidized Loans for your undergraduate education, which currently charge a fixed interest rate of 3.73 percent. On a standard 10-year repayment plan, your monthly payment would work out to $359.88, and you’d pay a total of $4,318.56 over 52 weeks.
Now imagine that you break up your payment in half and pay $179.94 every two weeks. Over a year, that amounts to $4,678.44 — one full payment more than you would pay otherwise. Over the 10-year plan, you’d pay off your student loans 11 months faster.
What’s more, you’ll also pay less interest by structuring payments this way. Every dollar you pay over your required amount can go directly toward your principal balance, meaning less of your payment gets eaten up by interest charges over time.
How to set up biweekly payments
To set up biweekly payments, all you have to do is make a mental note to pay your student loans biweekly instead of monthly, then make sure your budget is set up accordingly. Most lenders don’t have systems in place to utilize autopay on a biweekly cadence, though you can always ask your lender about your options.
For biweekly payments to help pay off your student loans, you’ll need to:
- Split your monthly payment in half. Take your regular student loan payment and divide it in half. The amount you come up with is how much you’ll pay on a biweekly payment plan.
- Pay that amount every two weeks. Instead of paying your student loan bill once per month, you’ll make the biweekly payment every other week.
- Make both payments before your student loan due date. Both payments made within a …….