When it comes to paying off student loans, most borrowers opt for the simplest option: regular monthly payments, often deducted automatically from a bank account. However, you’re not limited to the standard payment schedule. If you choose to make payments on your student loans biweekly instead of once a month, you’ll pay off your loans faster and save money in the process.
Why biweekly payments help you pay off student loans faster
When you make biweekly payments on your student loans, you are choosing to make 26 half-payments instead of the 12 monthly payments you would normally make. With 26 half-payments made over the course of a year, you wind up making one extra full payment on your student loan every 12 months.
How much you can save with this method depends on how much you owe, your current payment and your current student loan interest rate. However, the following example can give you a general idea.
Let’s say you borrow $36,000 in Direct Unsubsidized Loans for your undergraduate education, which currently charge a fixed interest rate of 3.73 percent. On a standard 10-year repayment plan, your monthly payment would work out to $359.88, and you’d pay a total of $4,318.56 over 52 weeks.
Now imagine that you break up your payment in half and pay $179.94 every two weeks. Over a year, that amounts to $4,678.44 — one full payment more than you would pay otherwise. Over the 10-year plan, you’d pay off your student loans 11 months faster.
What’s more, you’ll also pay less interest by structuring payments this way. Every dollar you pay over your required amount can go directly toward your principal balance, meaning less of your payment gets eaten up by interest charges over time.
How to set up biweekly payments
To set up biweekly payments, all you have to do is make a mental note to pay your student loans biweekly instead of monthly, then make sure your budget is set up accordingly. Most lenders don’t have systems in place to utilize autopay on a biweekly cadence, though you can always ask your lender about your options.
For biweekly payments to help pay off your student loans, you’ll need to:
- Split your monthly payment in half. Take your regular student loan payment and divide it in half. The amount you come up with is how much you’ll pay on a biweekly payment plan.
- Pay that amount every two weeks. Instead of paying your student loan bill once per month, you’ll make the biweekly payment every other week.
- Make both payments before your student loan due date. Both payments made within a month need to be applied to your student loan before your due date every billing period.
- Make sure that your lender applies the payments the right way. You’ll may need to reach out to your lender to ensure that overpayments are applied to the principal of your student loan instead of toward future payments.
How to budget for biweekly payments
Making payments biweekly means that you’ll pay a little extra toward your student loans every month, so you may need to adjust your budget slightly. If you receive paychecks biweekly, try to line up your student loan payments accordingly — that way, it’s easier to see how biweekly payments affect your monthly expenses.
Once you can compare that biweekly payment against your take-home pay, make sure that you have enough income to cover other important bills and expenses, such as your rent or mortgage payment, car payment, insurance bills, utility bills and typical living expenses. If you need to, cut out discretionary spending where you can.
Other ways to pay off student loan debt faster
If you’re not sure if you can afford biweekly payments on your student loans, or if you’re just looking for the fastest way to pay off student loans, there are some additional strategies that can work.
Make payments every 3 weeks
Instead of making biweekly payments toward your student loans, or 26 half-payments per year, consider making your full monthly student loan payment every three weeks. With this repayment strategy, you would end up making slightly more than 17 student loan payments per year instead of 12.
Making monthly payments every three weeks will require a bigger financial commitment on your part, but the amount of time and money you save can be significant. With the $36,000 example above, making 17 full payments a year would shave off three years from the repayment period — not to mention dramatically lower total interest charges.
Consider refinancing student loans
Borrowers can also consider refinancing their student loans with a private lender, although refinancing federal loans with a private company means missing out on federal benefits like deferment, forbearance and income-driven repayment plans. If your main goal is getting out of debt, however, refinancing can definitely make sense.
When you refinance, you’ll get a new loan to replace your existing ones, in most case targeting a lower interest rate. By getting a lower interest rate, you may be able to make larger payments toward your principal and shorten your repayment timeline.
Implement other debt payoff strategies
With the debt snowball strategy, you’ll make the minimum payment on all of your loans, then put as much extra money as you can toward your smallest loan each month. As your smaller debts get paid off, you’ll “snowball” those payments toward the next-smallest debt until all your student loans are gone. This debt repayment strategy may not make the most sense in terms of savings, but it will help you reduce the number of loans you have while providing a regular motivational boost.
With debt avalanche, on the other hand, you’ll make the minimum payment on all of your loans, then pay as much extra as you can on the loan with the highest interest rate each month. As your most expensive debts get paid off, you’ll “avalanche” those payments toward the loan with the next-highest interest rate until all your loans are paid off. This debt repayment will help you save the most in interest over time, all while helping you pay off student loans faster.
Enroll in Public Service Loan Forgiveness
You may consider enrolling in Public Service Loan Forgiveness, or PSLF, if you’re planning on pursuing work in the public sector. You have to work for an eligible public service employer to qualify, but this plan lets you make monthly payments on an income-driven repayment plan for 120 months before your remaining loan amounts are forgiven.
While PSLF does require a full 10 years of on-time monthly payments to qualify, this repayment plan can be a lifeline for individuals who struggle to afford the payment on a standard 10-year repayment plan, as well as those who might spend decades in student debt otherwise.