We know you have big dreams for your post-college life. Whether your goals include landing a coveted position or embarking on a trek around the globe, we’re positive your dreams don’t include spending half of your adult life repaying student loan debt. Fortunately, you won’t have to. By taking steps now, you can reduce the amount of student loan interest you’ll rack up.

Your total interest charges are determined by several factors. These factors include the amount borrowed, interest rates, compounding schedules, repayment terms, disbursement dates, payment due dates and more. The lender often controls many of these variables. However, you can influence how much interest you actually pay on your student loans.

Here’s how:

1. Sign up for discounts to pay less in loan interest.

The easiest way to pay less in interest is to sign up for lender perks. Program details vary, but discounts are typically rewarded to borrowers for lender loyalty or enrolling in auto pay. Eligible borrowers with multiple accounts at the same financial institution, or those who sign up to have their payments automatically deducted from their bank accounts, can shave off 0.25% from their loan’s interest rate.


2. Make interest-only payments while in school.

Instead of letting student loan interest compound, make payments on your loans before required. By paying off interest as it’s added to the loan, you can reduce your total interest amount. Consider working a part-time job or earning a side income and applying your earnings toward interest payments.


3. Pay toward your principal balance while in-school.

The amount you borrow before interest or other fees are added to the loan is your principal balance. Even if you’re not required to make payments on your student loans while you’re still in school, consider adding the payment to your budget anyway. Driving down your balance helps you pay off your loan faster and gives your loan less time to compound the interest charges.

Speak to your lender or servicer to ensure the extra dollars you send are applied to the principal amount and not your next scheduled payment.


4. Shorten your repayment period.

The typical student loan repayment period is 10 years. It may be longer for private loans or if you select an alternative repayment plan for your federal student loans. However, the longer you take to pay off your loans, the more interest you’ll pay over time. Choose the shortest term you can comfortably afford. Trimming years off your payment schedule means you’ll have to pay more each month, but the interest savings can be worth it.


5. Refinance your student loans for potentially lower loan interest.

Once you enter the repayment phase, you might be able to refinance your student loans and receive a lower interest rate than the one initially assigned to each loan. A refinance can pay off multiple student loans with one new loan at a lower interest rate, with new repayment terms. If your goal is to save the most money as possible, consider refinancing your loans at a lower interest rate and commit to the shortest repayment term.


Please note that the information provided on this website is provided on a general basis and may not apply to your own specific individual needs, goals, financial position, experience, etc. LendKey does not guarantee that the information provided on any third-party website that LendKey offers a hyperlink to is up-to-date and accurate at the time you access it, and LendKey does not guarantee that information provided on such external websites (and this website) is best-suited for your particular circumstances. Therefore, you may want to consult with an expert (financial adviser, school financial aid office, etc.) before making financial decisions that may be discussed on this website.