After realizing that for every $100 extra we put toward my private student loan debt, we save $1326.76 in interest, we’ve been tossing around the idea of shortening the term on my loan. Tonight I finally called my lender to get rate quotes. My loan term is currently 25 years at about $750 per month, but we’ve been adding $100 to our payment every month for a while. My lender said that if they cut the term by five years, we would need to pay $785 a month. And to cut it by ten years, we would need to pay $869 a month…or roughly what we have been paying anyway.
I was shocked! It feels so fantastic to be able to see the light at the end of the tunnel. To think that we will be completely debt free in 15 years, even if we pay nothing more than the new minimum, feels great! I’m sure that as our incomes rise we’ll be able to chop away at it even faster. This is the best I’ve ever felt about my loans!
If you have any flexibility in your budget, and you’re paying off student loans, consider shortening the term. You’ll save with a lower interest rate and pay less compound interest.