This is the last week to make interest-free payments on federal student loans. Starting September 1st balances will begin accruing interest again and starting October 1st payments will be due for the first time in 3 years. When it comes to how to best tackle those payments Lending Tree applied pay-off methods used for other types of debt. They found the 'debt avalanche' and 'snowball' strategies could help borrowers get their balances to zero 100 months sooner.
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00:00 This is the last week to make interest-free payments on federal student loans.
00:05 Starting September 1st, balances will begin accruing interest again,
00:09 and starting October 1st, payments will be due for the first time in three years.
00:14 When it comes to how to best tackle those payments, LendingTree applied payoff methods used for other types of debt.
00:20 They found the debt avalanche and snowball strategies could help borrowers get their balances to zero 100 months sooner.
00:28 Here's a refresher on how those two methods work.
00:31 Debt avalanche is paying off debt with the highest interest first to keep it from accumulating more.
00:36 Snowballing is paying off your smallest debts first to see an instant win that can keep you motivated.
00:42 It really is just about what motivates you.
00:46 One of them is primarily about math and numbers. The other one's a little more psychological.
00:52 Whichever one of those is going to do the best job of getting you fired up to keep going to knock down that debt is the one that you should do.
01:01 Most loan providers will show you an itemized list on your account of how your federal student loans are broken up.
01:08 That way you can have a visual of how these payoff methods will work.
01:12 If you're planning to go back to school, you'll want to focus these strategies on your unsubsidized loans first.
01:18 Subsidized federal student loans do not accrue interest while you are in school or during deferment periods.