student loans

The 5 fastest ways to repay your college loans

Establish a college repayment fund
Establish your own college repayment fund | Roy Hsu/Blend Images/GettyImages

Establish a college repayment fund

If a graduate can save an additional $100, $200 or more a month and deposit it into an account via automatic savings, it can speed up repayment. Having money moved automatically is effective because it's forced savings, Katz says. It enables people to set aside money to grow that otherwise would be spent on TVs or iPhones, Katz says. Just make sure to set up an account that will be used only for paying back your college debt. Don't use checking or savings accounts you already have because you might use that money for something other than your student loan.

When you create the account, you can tie it to mutual funds, saving accounts, annuities and stocks that offer dividend reinvestment plans. The most effective way to ensure that the cash saved multiplies is to let the money grow until it accumulates into a lump sum and then transfer it a chunk at a time to pay off the loan balance. "How long somebody must save depends on the returns they get, as well as the amount they are investing and how much they owe," he says.

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Of course, there's risk associated with savings in investments like mutual funds because the stock market is volatile and can fall. Typically, over the span of a 5-year or longer loan, stock market investments recover and grow, he says.

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