Paying Off Student Loans the Smart Way

Researchers at the University of Colorado Boulder used mathematical models to figure out the best way to pay off student loans. They found the best way is to pay off the loan as quickly as possible for the first several years, then switch to an income-based repayment plan.

There are two ways to pay off a student loans. One is to pay it off as quickly as possible. The other way is to enroll in an income-based repayment plan. The researchers found a hybrid of these two approaches is the best.

The is probably the first time a mathematical model was used to look at best repayment plans for student loans. Very little research has been conducted in the area of student loans related to financial mathematics.

You can read how they came up with this model in the scientific journal the paper was published in.

SIAM Journal on Financial Mathematics

“Short Communication: American Student Loans: Repayment and Valuation”