Student Loan Payments

A friend of mine emailed me to go over her student loan payments, she had been paying without fail and one of the loans hadn't been going down very fast. The second loan was going down, but she wanted to get rid of it as quick as possible, thus the reason we were going over her loans.

Flickr/CC - YuvalH

 One loan was around 5 grand and the other was just under 2 grand. Sadly, these loans couldn't be consolidated. She was also frustrated with the fact that she would be paying a higher interest and she wasn't sure how that affected her.

On the 5k loan, she was paying just over 60 dollars, of that, we found that about 2/3 was for the principle. At this rate her loan was going to take 11 1/2 years to pay this back. Even if she paid every two weeks, that would only save her 18 months. She wanted to do better.

After figuring what she could afford she decided to go with 90 dollars, which will cut down her time in payments to just under 7 years. Not great, but better.

As for the other loan that is just under 2k, she was paying about 55 dollars - this was going to take about 3 1/2 years to pay off. For this little loan, she figured she could up the amount to 75 and that would cut back on the time to 2 1/2 years.

In the end she added 48 dollars to her monthly loan payments, shaved off 5 1/2 years of payments and interest. She also plans on putting any extra money from taxes or bonuses towards the smaller loan and when that is paid off, roll the payment over to pay off the larger one.

Now she isn't as depressed and can see the light at the top of the debt pit. This is the Loan Repayment calculator that was used, nice and simple.