What is a Student Loan Payoff Calculator?

Student Loan

A student loan payoff calculator enables you to calculate your loan payments.

You will need the details of your total loan amount, the amount that has been already paid off, the anticipated rate of interest and the duration term of the loan.

When it comes to Federal loans, the standard repayment cycle is 10 years. If you have availed a student loan from a private lender, then the repayment duration ranges from 5 years to 20 years. Once you have applied for a student loan a definite term will be set.

Interest rates for Federal and private student loans

When it comes to Federal student loans, there will be a fixed interest rate which means that the rate of your loan will not change over time. However, with private student loans, there is a range of interest rates as these loans are credit-based which means that the rate of interest largely depends on you or your cosigner’s creditworthiness.

It is advisable to use a student loan payoff calculator to check the duration of how long you will have to keep making payments and how soon you can rid yourself of debt.

The Other Ways to Pay Off Student Loans

After you have calculated how much you still owe, devise a payment strategy to pay off your loans. Depending on your financial circumstances, you can accelerate the repayment plan and save money by doing any of the following listed below.

Get a part-time or freelance job

If you are strapped for cash due to most of your monthly earnings going towards your loan repayments, you should try other ways to earn extra money such as getting a part-time job or working as a freelancer in your spare time.

Use windfalls to pay off debt

If you have received any extra cash through inheritance, legal settlement, lottery winnings, a raise, bonus, tax refund or as a gift, it is referred to as a financial windfall. Loans can be repaid faster by using windfalls to your advantage, you can use the lump sum amount to reduce your loan balance which will result in you clearing your loan ahead of schedule and will reduce the total interest you end up paying on the loan.

Loan Assistance from your Employer

If you are looking for loan assistance, check with your employer as most employers have a student loan repayment assistance program as part of their benefits package. Approach the Human Resources Department to see what can be done.

Consider Refinancing

If you have availed a student loan with a high-interest rate, you can refinance your student loan which will help you lower your interest rate and save cash. Read more details about student loan refinance calculator over here. The drawback is that you will lose certain loan benefits but you can ensure that more of your money goes towards your lowering your principal amount rather than the interest charges.

Set up Automatic Payments

It is advisable to set up automatic payments, this will make sure that you do not miss any repayments and stick to your loan repayment cycle. There are certain lenders that offer a 0.25% discount on your interest rate if you use the option of automatic payments.

What is The Process of Student Loan Refinancing?

If the student loan you availed is too much of a burden, you can refinance this loan. When this occurs, a private lender will pay off your existing debt and replace your student loan with another loan which will have lower interest rates and better repayment terms.

If you have qualified for the refinancing process, you can achieve many objectives much faster which are listed below.

  • You can save more money on interest with a lower rate.
  • You can accordingly adjust your monthly payments to match your other goals.
  • You can remove a co-signer from your debt.
  • You can switch to a new loan provider with better customer service and support.

The Eligibility Criteria to Refinance a Student Loan

Both Federal loans and private loans can be refinanced. To refinance a student loan, loan providers have certain terms and conditions to be met which are listed below.

  • Most loan providers require you to have a credit score of 650 and above.
  • Most lenders will need you to have a steady source of income or an offer of employment.

If you do not have a steady income source or are unemployed, you can still qualify for refinancing your loan by applying with a creditworthy cosigner who can vouch for you such as a parent or guardian.

Apart from your annual income and credit score, loan providers will also look into your savings and debt-to-income ratio. Most lenders also require proof of graduation, as they only approve applicants who are degree holders. If you have not graduated, the number of student loan refinance providers that will be willing to work with you will be few and far between.

The Main Disadvantage Of Refinancing Student Loans

When you refinance a federal student loan, it will convert them to private loans. Due to this, you will lose access to all federal programs such as public service loan forgiveness, income-driven repayment, etc. If you are someone who heavily relies on Federal benefits, do not refinance your student loan.