Extended Student Loan Plans Allow You to Save on Interest If You Overpay
It is always better to pay off the loan sooner rather than later. However, when you get a student loan, extended loan repayment plans can save you some money in interest if you pay them like you have a shorter plan.
As one of the Reddit users explains, if you have multiple balances with different interest rates, any amount you pay in excess of your minimum will primarily apply to the loan with the highest interest rate. This user’s current plan is a 10-year repayment plan, but by extending it to 25 years while paying the minimum required by the 10-year plan, they could save just over $ 1,000 without any change to their payment needs. …
Of course, if you are going to try this, you should check the terms of your specific loans yourself. And it only works if you have the self-discipline to keep paying more than you technically need . However, whenever you get a loan, always count it long term. Not just what monthly payments you can afford.
Am I crazy or can I really save money by using the extended repayment plan on federal loans? | Reddit