This website has previously discussed some of the practicalities of paying off student loans. Indeed, prior articles have considered methods that can be used to keep track of student loans, and other articles have discussed how methods can help you psychologically while you repay debt. One question that is commonly asked by student debt borrowers is when you should pay student loans every month, since many lenders allow borrowers to designate a given date when payments are made. There are a few considerations that should be kept in mind when picking a date to submit student loan payments each month.
The day you are paid may make a huge difference in when you should pay student loans every month. People are paid on different schedules, and some individuals receive deposits twice a month while other employers pay employees every two weeks, which means employees will be paid more in some months than others. During my student debt repayment saga, I scheduled my student loan payments to be withdrawn from my bank account a day or two before each of my paydays.
The reason why paydays may influence when you should pay student loans every month is the psychological impact of having money in your bank account. In my experience, if your bank account balance increases, you might be more tempted to spend money than if you have a lower bank account balance. For this reason, it often makes sense to split your money into multiple bank accounts so you never realize how much money you have.
Along similar lines, it makes sense to submit your student loan payment right before a payday. If you time things well, your student loan payment will leave your account around the same time you are paid, and your full payday amount will never be seen in your bank account. Of course, you may want to ensure that there is enough money in your bank account so that your student loan payment does not bounce, but timing your student loan payments with your payday can help you stay on track toward debt repayment.
You should also pay your student loans as early in the month as possible while deciding when you should pay student loans every month. As previously stated, the lower your bank account balance is, the less tempted you may be to spend money frivolously. As such, if you can withdraw a substantial amount of your bank account balance as early in the month as possible, there will be less time that you will have a higher balance.
For this reason, it might make sense to pay student loans in advance in the months before they are due. In fact, during my student loan repayment saga, I routinely paid my student loans many months in advance so that my bank account had a lower balance. Of course, there are other benefits to repaying student loans in advance, such as minimizing interest accruing on the debt and giving yourself a financial cushion, and prior articles on this website have already discussed these advantages.
Naturally, if you are struggling financially, when you should pay student loans every month is different than if you have more resources. It might be tempting to pay student loans on the last day possible each month if you are having financial issues. This presumably allows you to be paid as much as possible from your employer before submitting a payment and before you need to pay rent and other expenses for the next month.
However, paying student loans much later in the month can get you into trouble down the road. If you have unexpected expenses during the month, it might be difficult to come up with the money to pay off your debt. In addition, you might also forget student loans in financial calculations if you wait to pay them off, and this can make it difficult to make the best financial decisions.
For this reason, borrowers should challenge themselves, and try to pay off student loans as early in the month as possible. If borrowers run into trouble, they can apply for forbearance programs and other initiatives that can provide some relief. Only in extreme cases should borrowers wait until the end of the month to repay student loans.
The grace period on your student debt may also influence when you should pay student loans every month. If you are facing unforeseen expenses, you may need to wait until the month after a student loan payment is due to make a payment. Many student loan lenders allow borrowers to make a payment ten or fifteen days after the due date without incurring a penalty. As a result, borrowers should be able to temporarily submit payments before this date. It is important to stay informed about the grace period of a student loan lender, since submitting late payments that are not within a grace period may impact your credit and your standing with your student loan lender.
In the end, there are a variety of considerations that should be evaluated while deciding when you should pay student loans every month. Student debt borrowers should try to pay off their student loans earlier in the month, and before a payday, so bank account balances are not inflated. In addition, if a borrower experiences financial difficulties, they should still try to pay off their debt before the grace period on their loans expires.