college

The 5 fastest ways to repay your college loans

Treat the loan like a mortgage
Treat the loan like a mortgage © Cheryl Savan/Shutterstock.com

If you can afford it, treat the loan like a mortgage and simply make larger payments to reduce the principal more quickly, says financial planner Allan Katz, CFP, president of Comprehensive Wealth Management Group in New York's Staten Island.

For example, a $25,000 student loan with 6.8 percent interest with a 10-year payback period would cost $288 a month. Paying $700 a month instead of $288 enables the borrower to repay the loan in just over three years, Katz says.

By doing this, borrowers are "paying the principal down more quickly, which results in lower interest charges," he says. By paying extra, the entire loan would cost $28,000 rather than $34,560.

Another strategy is adding payments and sending in checks every two weeks rather than monthly.

Once that college loan is repaid, the benefits proliferate. "It's one less debt you owe. The money you make is now free to be invested and applied to owning a house, saving for retirement or putting a child through college," Katz says.

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