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What are some ways to pay off private student loans?

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Quick Answer

Strategies for paying off private student loans include being thoroughly acquainted with the details of the loans, picking the right repayment options, regularly communicating with the lender, and avoiding delinquency or default. According to the Institute for College Access and Success, paying off student loans may be expedited by consolidating, prepaying and paying off the most expensive loans first.

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Full Answer

Efficiently paying off private student loans requires knowing the lender, repayment status and balance of all the loans. Sometimes a borrower may be eligible for repayment options that minimize the monthly payment or that allow for a temporary forbearance from payments. Additionally, being acquainted with the details of all loans equips the borrower with the knowledge of any applicable grace periods and helps the borrower avoid costly penalties for non-payment. Borrowers should always stay in touch with lenders and update their contact information when applicable, as this decreases the likelihood of their accounts being sent to collection agencies and subsequent fees being assessed. The Institute for College Access and Success states that delinquency or default should always be avoided, as it may harm the borrower's credit score and subject the borrower to wage garnishment and additional penalties.

Borrowers may also minimize their financial burden through consolidating multiple loans into a single loan with a lower monthly payment and lower interest rates. Prepaying on loans may accelerate the repayment process, but borrowers should always direct the lender to apply the extra amount to the balance of the loan or it may otherwise be applied to future payments. When prepaying on loans, the Institute for College Access and Success recommends first paying off loans with higher interest rates, as this saves the borrower money in the long term.

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