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How to Pay Private Student Loans
Updated On September 14, 2022
Editorial Note: This content is based solely on the author's opinions and is not provided, approved, endorsed or reviewed by any financial institution or partner.
If you want to know how to pay private student loans, the good news is that you have several options for private student loan repayment.
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Here’s how to pay private student loans:
- Refinance student loans
- Make extra student loan payments
- Enroll in autopay
- Make a lump-sum student loan payment
- Frequently Asked Questions
Refinance student loans
If you want to know how to pay private student loans, student loan refinancing is a popular strategy. When you refinance student loans, you can get a lower interest rate, lower student loan payment or both. Therefore, refinancing student loans helps you save money and pay off student loans faster.
Who should refinance student loans? Student loan refinance is best for student loan borrowers who have:
- a high interest rate;
- large student loan payment; and
- excellent credit
Student loan refinance allows you to choose either a variable interest rate or fixed interest rate. You also have the option to choose a student loan repayment term between 5 and 20 years.
Check the latest rates for student loan refinancing.
This student loan refinancing calculator shows you how much you can save when you refinance student loans.
For example, let’s assume that you have $100,000 of private student loans at 7.5% interest rate and a 10-year repayment term. Let’s assume you refinance student loans at a 3% interest rate and a 10-year repayment term. You would save $221 each month and $26,569 overall.
Learn more about how to refinance student loans:
- 7 reasons why you should refinance student loans now
- How to refinance student loans
- Top 30 questions about student loan refinancing
- Why refinance student loans
View: the top lenders to refinance student loans.
Compare: the latest rates for student loan refinancing.
Learn: the difference between student loan refinancing and student loan consolidation.
Make extra student loan payments
Another way how to pay private student loans is to make extra student loan payments. Each month, make sure to pay your minimum monthly payment. To pay off private student loans faster, you can make extra student loan payments.
This student loan payoff calculator shows you how much money you can save when you pay off student loans faster.
For example, let’s assume that you have $200,000 of student loans with an 8% interest rate and $2.427 monthly student loan payment. If you pay an extra $500 per month (for a total of $2,927 per month), you could pay off your student loans 2.33 years earlier and save $23,360.
If you make extra student loan payments, make sure to inform your student loan servicer in writing. Your student loan servicer should apply your extra student loan payment toward reducing your principal student loan balance.
(How to pay federal student loans).
Enroll in autopay
You can pay private student loans by enrolling in autopay. Autopay, or automatic payments, is the process of connecting your student loan accounts to your bank account. Each month, your student loan company will automatically deduct your monthly student loan payment directly from your bank account. With autopay, you won’t have to worry about missing a student loan payment or making a late student loan payment.
The advantage of enrolling in autopay is that you can lower your interest rate by 0.25%. For example, let’s assume your student loan interest rate is 5%. With autopay, your student loan interest will become 4.75%.
Make a lump-sum student loan payment
To pay private student loans, you can make a lump-sum student loan payment.
Each month, you should always make the minimum student loan payment. In addition, you can also make a lump-sum student loan payment to save student loan interest.
This lump sum extra payment calculator shows you how much money and time you can save when you make a lump sum payment or extra payment toward your student loans.
For example, let’s assume you have $70,000 of student loans, an 8% interest rate and $849 monthly student loan payment. Now, let’s assume you make a one-time, lump-sum student loan payment of $5,000.
If you make a one-time, extra payment of $5,000, you will save $4,830 on your student loans. Plus, you will pay off your student loans 12 months earlier.
Frequently Asked Questions
How long will it take to pay private student loans?
The amount of time it takes to pay private student loans depends on your strategy for student loan repayment.
For example:
- Standard Repayment Plan: 10 years
- Student Loan Refinancing: 5 to 20 years
- Extra Student Loan Payment: varies
- Lump-Sum Student Loan Payment: varies
A shorter student loan repayment term such as 5 years will result in a higher monthly payment, but you will save more money in interest. A longer student loan repayment term such as 20 years will result in a lower student loan payment, but it will cost more interest over time.
What’s the fastest way to pay student loans?
The fastest way to pay student loans includes student loan refinancing, enrolling in autopay, making an extra student loan payment, and making a one-time, lump-sum student loan payment.
Are private student loans forgiven after 20 years?
Unlike federal student loans, private student loans aren’t forgiven after 20 years.
Why? Private student loans generally don’t have student loan forgiveness or income-driven repayment plans. That said, your private student loan lender or student loan servicer may offer forbearance, deferment or other options for student loan repayment.
How to pay private student loans
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