How to save money on your student loans!!!!!

Shhhhhh......don't let the big student loan lenders know you found out about this: you can make principal payments on your FFEL loans at any time for any amount without incurring a prepayment fee!

Yep, that's right. FFEL loans have no prepayment provision...Stafford, Plus, Consolidation, it doesn't matter which flavor. So why is this feature so important? Well, as they say "Time is Money!" We're not so sure who said that, but "they" did say that at one point. And they're right. There is a time value to money. The longer you keep the money, the more it costs in absolute terms. If you shorten the time you borrow money, it costs you less. How can this be? Consider the following.

Let's say you consolidated your FFEL loans. You now have a $30,000 outstanding balance, 25 year term, 5.25% interest rate, and your payments are roughly $180/month. That's your MINIMUM monthly payment. You can (and should) pay more. But first, let's say you only pay the minimum amount each month...that works out to nearly $24,000 of interest (in addition to the $30,000 in principal) that you'll pay back over the 25 years.

Now, let's say you pay an additional $25 each month. If you do this faithfully each month, you'll only pay about $18,000 in interest...or a savings of $6,000...and the loan is paid back in 19.5 years instead of 25 years. But wait. What if you paid an additional $50 per month? Well, you'd end up paying about $14,500 in interest (a savings of about $10,000) and have the student loan monkey off your back in 16 years. Now what if you not only made that faithful $50 principal payment per month, but each April you paid back an additional $250 as you got your tax money back? Easy, your total interest expended on that original $30k is now about $12,500 (a savings of $11,500) and you'd have the stinkin' loan paid off in a little more than 14 years.

We could go on and on with money saving examples. The point is, it doesn't take too much extra each month to get the loan paid off quicker and you saving some cash sooner. Just be consistent about it, and the more generous you are about it, the more you save. See, student loans aren't all that bad.....they're a convienent vehicle to facilitate a college education.