We’ve all heard about debt consolidation – this is basically when you lump/combine all your ownings into one loan and make a sum monthly payment to pay off college loans. This is an alternative to paying a bunch of smaller payments… for many this seems like a great idea – however, there may come a time when you’d rather have a smaller payment in a given month… then what can you do?! Life happens!
It is always encouraged to make extra payments for paying off college loans. Doing so does not have any effect on your monthly payment, it just reduces the length of time you need to make your payments.
Pay off College Loans the Right Way
There are two common ways students pay off their loans: 1. The snowball effect – which is paying off the lowest balance owning and then the second smallest, and so on until the loan has been paid off. In this method you are essentially buying time on the clock and should be saving along the way to apply to your other monthly installments. 2. The avalanche effect – and just like the name, this is definitely not a preferred method. Here you are paying off the loan at the end of the term with the highest interest rate in effect. Definitely try not to be this person!
It’s super easy to have your loans ungrouped, simply call your loan service provider. By doing this you will be able to have control over your payments and allocate monies where you would like.
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