Avoid Paying More for your Loan

You can reduce the cost of your loan over time by following a few of these tips.

Make your payments on time

If you pay late, you’ll pay more interest because you’re paying down your balance more slowly than was expected.

You can schedule recurring, automatic monthly payments by signing up for KwikPay online. To sign up for KwikPay, log into your account and select “KwikPay (auto debit)” under the “Payments” option.

Make payments while you’re in school or in a deferment

Students your unsubsidized and Graduate PLUS loans accrue interest even while you’re in school. If you decide to delay paying the interest, be aware that your interest may capitalize when you leave school. “Capitalized interest” means that the accumulated interest is added to the principal of the loan.

Capitalized interest causes your principal balance to grow and increases the cost of repaying your debt. A larger principal balance means you’ll pay more interest over the life of the loan.

Parents the Parent PLUS loan begins accruing interest when it is first disbursed. You may be able to defer your payments while your dependent is enrolled, however interest will still accrue.

Making payments as soon as you can when not in repayment will help reduce the amount you’ll have to repay over time.

Understand the Impact of Extending the Term of your Loan

Many education loans are set up to be repaid within 10 years. You may decide you want to apply to extend your loan payments out over 25–30 years. If you’re eligible, this will enable you to make lower monthly payments. However, lower monthly payments over a longer repayment term mean higher estimated interest charges over the life of your loan.

Pay a Little Extra with Each Payment

Once you begin repaying your loan:

  • each payment first goes toward paying the interest that has accumulated. The amount of interest taken from each payment depends on:the number of days between your paymentsthe amount of principal that remains on your loanyour interest rate
  • the remainder of each payment goes toward reducing your principal.

If you pay even a little bit extra with each payment, you pay off your loan more quickly and help reduce your total estimated interest charges because you reduce your principal balance more quickly. This lowers the interest that is calculated, and thereby lowers the total cost of your loan.

There is never any penalty for prepayment (paying off your loan before your payment period is up).

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