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Treat the loan like a mortgage
If you can afford it, treat the loan like a mortgage and simply make larger payments to cut the principal more quickly, says financial planner Allan Katz, CFP professional, president of Comprehensive Wealth Management Group in New York's Staten Island.
For example, a $25,000 student loan with 6.8 % 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 3 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 2 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.