Comparing Different Repayment Strategies For Student Loans – BOSTON, July 25, 2023 ( — With the fall semester fast approaching, a new class of students is considering how to fund their college bill. Choices made today will impact families for years to come.

That’s why MEFA is urging students and parents to minimize borrowing and understand the long-term obligation of student loans. As the authority on college planning, economics and paying, MEFA offers a wealth of free advice at

Comparing Different Repayment Strategies For Student Loans

Comparing Different Repayment Strategies For Student Loans

“The national debate over federal student loan forgiveness has sparked a thoughtful conversation among new borrowers about how to achieve the college dream while minimizing debt. A college degree remains a solid investment for many career choices. career, and MEFA is here as a public resource to help families. Together, we can reduce borrowing, carefully consider funding options, and put students on a course towards career and financial success,” said Thomas Graf, Executive Director from MEFA.

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If families need loans, MEFA advises students and parents to complete the FAFSA to receive Federal Direct Student Loans. These types of loans usually offer favorable terms and conditions.

MEFA experts are available to help with advice on how to pay your college bill at (800) 449-6332 or by emailing

Visit for free college planning guidance, including webinars, videos, the MEFA Podcast, and articles covering a full range of college planning topics.

*Annual Percentage Rate (APR) is designed to help consumers understand the relative cost of a loan and reflects the loan’s interest rate, timing of payments and fees. The lowest MEFA rates are only available to applicants with the highest credit standing.

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Press Releases Billionaire business mogul and philanthropist Dr. Trisha Bailey announces a multi-city book tour this fall for her motivational memoir ‘Invincible: One Woman’s Triumphant Story’. With the debt avalanche method, you pay off the high-interest debt first. With the debt snowball method, you pay off the smallest debt first.

Comparing Different Repayment Strategies For Student Loans

Each method requires you to list your debts and make minimum payments on all but one of them. Then, once you pay off the debt, you target another balance, and so on until you pay off all your debts. Depending on your personal preference and circumstances, you may see which method may be best suited for you once you understand the differences.

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Both the snowball method and the avalanche method are types of accelerated debt payment plans – ways to speed up paying off your debts by paying more than the minimum amount owed each month. Of course, both assume you can commit extra funds to regularly pay what you owe. If your budget is tight, you might want to make only minimum payments.

The debt avalanche method involves making minimum payments on all your outstanding bills and then using the extra money to pay off the bill with the highest interest rate. Using the debt avalanche method will save you the most on interest payments.

For example, let’s say you have an extra $3,000 to pay off your debt payment every month, and you have the following debts:

In this scenario, the avalanche method would have you pay off the credit card debt first because it has the highest interest rate. If you put your extra money into that debt, you’ll pay off the remaining debt in 11 months, paying a total of $1,011.60 in interest.

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In comparison, the snowball method would have you deal with the car loan first. You would be debt free in 11 months, but you would have paid $1,514.97 in interest.

If you have significant debt, the avalanche method of targeting the debt with the highest interest rate can also cut the time it takes to pay off the debt by a few months.

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Comparing Different Repayment Strategies For Student Loans

The debt avalanche method can save time and money, but it has its drawbacks. It takes discipline to regularly put your extra money towards paying off a specific debt, not just the minimum. The debt avalanche won’t work as well if you lose motivation and abandon the strategy.

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The debt avalanche approach also assumes a specific, constant amount of discretionary income that you can apply to pay off your debts. If your daily expenses increase or emergency expenses arise, you may need to stop using the debt avalanche approach.

The debt snowball method involves paying off smaller debts first and then moving on to larger ones. It’s a strategy where you essentially tackle the easiest jobs first.

First, list all outstanding amounts you owe in ascending order of size. Set the lowest to pay first, then put your extra money into those payments after you’ve made all the minimum payments on all of your accounts.

Let’s see how the snowball effect works when you have an extra $3,000 to dedicate to paying down debt each month and you have:

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The snowball method would have you focus on the car loan first because you owe the least amount of money on it. You would solve that in about three months and then you would solve the other two. Just like the debt avalanche method, you’ll be debt-free in about 11 months. However, you would have paid $1,514.97 in interest – about $500 more in total.

The advantage of the snowball method is that it can help you get more motivated to pay off a smaller debt sooner.

The significant advantage of the debt snowball method is that it helps to increase motivation. Because you see faster results with eliminating debt. This can help encourage you to stick with the plan. With this strategy, you don’t need to compare interest rates or APRs, just the amounts owed.

Comparing Different Repayment Strategies For Student Loans

The big disadvantage of the debt snowball is that it doesn’t reduce the amount you pay in general interest as much as the debt avalanche method.

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Whether a debt snowball or a debt avalanche is better depends on your circumstances. In terms of saving money, an avalanche of debt is better. But some people find the debt snowball method better because it can be more motivating.

Ideally, pay off the debt with the highest interest rate first. But if you find paying off small debts more motivating, you might want to pay them off first.

Paying down debt has its perks – especially if you’re incurring a high interest rate that can quickly add up and add to your debt. Getting out of debt will improve your credit score, helping to improve your chances of getting approved for loans like mortgages, personal loans, and credit cards. Paying off debt can free up funds for other purposes, such as saving or investing.

The debt avalanche method and the debt snowball method are two different strategies for paying down debt faster than making the minimum payments. The debt repayment strategy that’s right for you will depend on your personal circumstances and preferences. Weigh the pros and cons of each strategy when developing your budget.

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The offers shown in this table are from companies from which you receive remuneration. This tradeoff can affect how and where listings appear. does not include all offers available on the market. The amount of student debt held in America is roughly equal to the size of the economy in Brazil or Australia. More than 45 million people collectively owe $1.6 trillion, according to US government data.

That number has skyrocketed over the last half century as the cost of higher education has continued to rise. The growth in cost was substantially greater than the increase in most other household expenses.

Comparing Different Repayment Strategies For Student Loans

The rise in the cost of college comes at a time when students receive less government support, putting a greater burden on students and families to borrow to finance their education.

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State funding in particular has declined steadily, accounting for about 60% of higher education spending just before the pandemic, according to an analysis by the Urban Institute, down from about 70% in the 1970s.

State and local government share in higher education spending has declined Share in higher education spending

To address the growing crisis, President Biden announced a plan on Wednesday to eliminate significant amounts of student debt for millions of people. It was a step toward fulfilling a campaign promise to alleviate, as Biden put it, an unsustainable problem that has plagued generations of Americans.

“The burden is so heavy that even if you graduate,” he said,

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