Minimum payments are just that: Minimum. If you can afford to make larger payments it can save you a lot of money in interest. Making larger payments will get your loan paid off much faster than going with the barebones amount. The faster you pay off the principal loan, the less interest you will accrue and have to pay off too.
If you find yourself strapped for cash one month, sending in the minimum amount is fine. You do not have to pay the same every month. Some months you might be able to pay 25 percent more, and others you might only be able to afford 10 percent. Anything extra that you can pay the lender each month will make a difference, no matter what the amount.
By doing this and reducing the amount of debt you have, it makes things in the future like getting a mortgage for a house much easier. You might even be able to get a great deal on a mortgage through the same lender as your student loans. Take this into account when you enter student loan repayment.
|Jennifer Mathes, Ph.D.|