Note how the total balance after the second month is lower in the method where we pay Loan B first. This is our initial proof that the method works and that by minimizing interest we are taking down the balance as quickly as possible.You’ll also notice the “months of repayment.” Again, our method is superior.This is the simple rule I learned after searching high and low for complicated formulas.It goes something like this: Put your money toward the account with the highest interest rate. Following this principle is the best way to pay off student loans and will save you money in the long-run. Because the accounts with the highest interest rates will grow the fastest, increasing your total payment and extending the length of your payment.But this statistic is misleading, because a lot of borrowers think this means qualifying for some type of student loan forgiveness program. Actually, most borrowers qualify for student loan forgiveness through one of these “secret” ways.
You can call them at 1-866-863-3870 or check out their website here.Now, there’s two ways you can use your extra money.You can pay off Loan A in full and then pay Loan B.Or, you can pay off Loan B and then pay off Loan A.If you pay off Loan A first and then put all your extra to Loan B after that, these will be your results: So the first question you might ask is why the table includes a column for “Balance after Second Month.” While that may not seem important, it really is.By paying Loan B first, you will complete the repayment in 52 months instead of 53. The savings might not seem like much, but it’s actually pretty significant in terms of overall percentages.