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There are three main reasons why you might want to make biweekly repayments on your student loans:
Paying your loans once every two weeks makes your repayments slightly more frequent than paying them off once a month. You’ll end up making an extra payment each year with little effort on your part. Paying off your loans faster will push up your final due date and reduce the overall cost of the loans.
Since interest adds up over time, paying off your loans faster reduces your total loan cost. So why not pay every four weeks instead? Because paying half that amount earlier reduces your loan principal, so you end up paying less interest on a lower amount.
Let’s take a look at an example:
Say you had a $10,000 loan balance with a 6% interest rate. You owe $400 toward your loan balance this month. If you make biweekly repayments, you’d pay $45.50 in interest.
But if you decide to wait until the full four weeks are up, you’d pay about $46 in interest. While that might not seem like much, those savings add up over time.
As we saw in the example above, you can save without making larger payments toward your loan balance. You can make a difference in your interest cost by spreading your monthly loan cost into smaller, more frequent repayments. This makes biweekly repayments a helpful saving tip if you don’t have a lot of extra money to put toward your loans.
How much you can save depends on your loan balance, your interest rate and how much you have left in your loan term.
Let’s take a look at how much you might save on a loan with a 6% interest rate with different balances and terms:
Loan balance | Remaining term | Interest savings |
---|---|---|
$5,000 | 5 years | $40.00 |
$10,000 | 10 years | $333.24 |
$15,000 | 15 years | $980.73 |
$20,000 | 10 years | $666.48 |
$25,000 | 15 years | $1,634.94 |
$30,000 | 15 years | $1,961.46 |
$40,000 | 20 years | $4,513.65 |
$50,000 | 25 years | $8,348.00 |
$100,000 | 25 years | $16,698.53 |
As this table shows, the sooner you sign up for biweekly repayments, the more you save on interest and the faster you get out of debt.
That depends on how much you have left in your loan term:
The best way to set up biweekly repayments is to schedule regular extra repayments on your student loans, rather than making them manually every month. Here’s how to get started:
Biweekly repayments might be an easy way to save, but they aren’t the right choice for everyone. You might want to stay away in the following situations:
Most lenders offer a 0.25% interest rate reduction when you sign up for autopay. If you’re not able to stay on autopay while making biweekly repayments, make sure the savings are worth the higher rate.
Applying for a program that would wipe out your full loan balance — like Public Service Loan Forgiveness (PSLF)? Repaying your loan faster means you’ll actually pay more in interest and toward the balance. These programs also might require you to enroll in a repayment plan that isn’t compatible with biweekly monthly repayments.
You likely aren’t signed up for an income-driven repayment (IDR) plan if your repayments cover your full balance and interest that adds up each month. But if you are on an IDR plan, you might not be able to save as much if you make extra repayments on your loan.
And you could actually make your loan more expensive if you decide to leave an IDR plan, since your lender adds any unpaid interest to your loan balance. This means you’ll be paying interest on interest.
Making biweekly repayments is an easy way to save on interest and get out of debt faster without affecting your monthly budget. But it might not be worth it if you’re on an incompatible repayment plan, want to apply for forgiveness or would lose your autopay discount.
You can learn more about how repayments work by checking out our guide to student loans.
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