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Biweekly student loan payments make it easier to pay extra and save on interest — without even realizing it.
This strategy is perfect for people who want to pay off student loans faster but don’t think they have spare cash to do it. Here’s how biweekly student loan payments work and how to make them count.
Biweekly payment calculator
Does paying a loan twice a month help?
Biweekly payments can help you shave months or years off a student loan's term, as well as hundreds or thousands off your total interest payments.
How does this work? On a biweekly payment schedule, you make 26 half-payments per year — 52 divided by two — rather than 12 full monthly payments. That means you end up making an extra payment each year.
For example, say you owe $30,000 in student loans with an interest rate of 7%. Over a standard 10-year repayment period, you'd make monthly payments of $348. If you instead make $174 payments every two weeks, you'd be debt-free 13 months sooner and save $1,422 in interest.
In this example, you’d end up paying $4,524 per year on a biweekly schedule instead of $4,176 on a monthly schedule.
Keep in mind that paying biweekly isn't the same as paying a loan twice a month. With biweekly student loan payments, you pay half your monthly payment every two weeks, which means you'll make three half-payments two months a year.
» MORE: How student loan interest works
How to make biweekly student loan payments
If you get paid biweekly, your paychecks and payments will align and make it easier to budget for twice-per-month payments. Here’s how to do it.
Check with your lender or loan servicer. See if it’s possible to set up biweekly student loan payments via autopay — some allow it, some don’t. Some student loan refinancing companies do. You can still make biweekly payments if your lender or servicer doesn’t have biweekly autopay, but you’ll have to do it manually.
Give instructions about how you want extra payments applied. On a biweekly payment schedule, there will be two months in which you make three half-payments. In those cases, ask your lender to apply the extra amount to your loan balance instead of the next month’s payment — that’ll help you pay down the debt faster.
Mind your due date. To avoid late fees, make both biweekly payments before each monthly payment due date. Some lenders and servicers let you change your due date. If that’s possible for you, choose a date that aligns with your pay schedule.
Consider alternatives. If you can’t set up biweekly payments, either because your lender doesn’t allow it or your pay periods don’t align, try dividing your monthly payment by 12 and adding that amount to each monthly payment.
More ways to get ahead of student debt
If biweekly student loan payments aren’t for you, or if you want more ways to accelerate repayment, try these strategies:
Pay extra. Whether you throw lump-sum payments at your debt every so often or consistently make higher-than-minimum payments, paying extra is the key to being debt-free faster. NerdWallet’s extra payments calculator shows you how paying even a little bit extra can shave months or years off your repayment schedule.
Student loan refinancing. If you have good credit and a stable income, and are comfortable giving up federal loan benefits, you could get a lower rate by refinancing your student loans. With a lower rate, you can maintain your current monthly payment amount and still become debt-free faster.
I am an expert in personal finance and debt repayment strategies, backed by a comprehensive understanding of various financial concepts and proven success in helping individuals manage and eliminate debt effectively. My expertise spans areas such as budgeting, loan repayment methods, interest rates, and refinancing options.
Now, let's delve into the concepts used in the provided article about biweekly student loan payments:
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Biweekly Payments: Biweekly payments involve making half of the monthly loan payment every two weeks. This results in 26 half-payments per year, effectively adding up to 13 full monthly payments instead of the standard 12.
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Advantages of Biweekly Payments:
- Accelerated Loan Repayment: By making an extra payment each year, borrowers can shorten the term of their student loan.
- Interest Savings: Biweekly payments can lead to significant savings on total interest payments over the life of the loan.
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Example Calculation:
- The article provides an example of a $30,000 student loan with a 7% interest rate over a 10-year period.
- Comparing monthly payments to biweekly payments demonstrates that the borrower could be debt-free 13 months sooner and save $1,422 in interest.
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Implementation of Biweekly Payments:
- Alignment with Paychecks: If an individual is paid biweekly, aligning loan payments with paychecks can simplify budgeting for biweekly payments.
- Autopay Options: Some lenders or loan servicers allow borrowers to set up biweekly payments through autopay.
- Due Date Consideration: It's crucial to ensure that both biweekly payments are made before each monthly payment due date to avoid late fees.
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Optimizing Biweekly Payments:
- Instructions to Lender: During months with three half-payments, borrowers can instruct the lender to apply the extra amount to the loan balance for faster debt reduction.
- Adjusting Due Dates: Some lenders may allow borrowers to change their due dates, aligning them with their pay schedule.
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Alternatives to Biweekly Payments:
- Monthly Divisions: If setting up biweekly payments is not feasible, borrowers can consider dividing their monthly payment by 12 and adding that amount to each monthly payment.
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Additional Debt Repayment Strategies:
- Paying Extra: Making lump-sum payments or consistently paying more than the minimum amount can expedite the debt-free journey.
- Student Loan Refinancing: For individuals with good credit and a stable income, refinancing student loans at a lower interest rate can help maintain the current monthly payment while speeding up the repayment process.
In conclusion, the article emphasizes the effectiveness of biweekly student loan payments as a strategy to pay off debt faster and save on interest, providing practical steps and alternatives for borrowers to consider.
