Jun 10, 2019

# How to Manage Student Loan Debt

By Team Stash

Pay off principal and consider extra payments.

## Student Loan Debt Repayment Strategies:

• Try to pay more than your monthly minimum payment, which can primarily be interest.
• By paying more than your interest, you’ll be paying down your principal.
• Consider making extra payments if you can, as it will help you pay down principal faster.
• Aim to pay off your loans in ten years or less, which is the standard for federal student loans. The longer you take to pay off your loans, the more interest you will pay, and the more expensive your original loan will become.
• If you’re confused by what you owe, call your lender and discuss how your payments are applied to your loan or loans.

### Principal

Principal is the original amount that you borrow on a loan. It’s different from interest, which is a percentage charged annually and added to the principal.

Find out

## Principal

Principal is the original amount that you borrowed on your loan. It’s different from interest, which is a percentage charged annually and added to the principal. (Special note: Principal can also be a sum of money that you save or invest, on which you earn interest.)

Example: Say you borrow \$30,000, with an interest rate of 5%. The principal of the loan is \$30,000. The interest rate is 5%, and your loan will accumulate interest charges on a daily basis.

To calculate your daily interest, divide the interest rate by the number of days in a year: 0.05/365=0.000136986.

Then multiply that number by your outstanding balance: 30,000 x 0.000136986=4.1. (So, \$4.10 is approximately how much interest you owe per day.)

Next, multiply that amount by the number of days in the month: 4.1 x 30=123, or \$123. That’s roughly how much interest you will owe each month.

If you had the option of making minimum payments of \$123 per month, you’d only be paying interest and not paying down any of the \$30,000 of principal. To pay off your loan with interest  in ten years, you’d have to pay \$308 per month, according to the federal student lender Sallie Mae.

Good to know: As you pay off your principal, the dollar amount of interest you owe will also decrease each month. (You can see how that works with this calculator.)

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