Your student loans are likely to be around for a while. Fortunately, there are some small solutions that can add up to help save you money and make your life a little easier.
1. Set Up Automatic Payments: Most student loan lenders give interest rate reductions for automated repayment. Check with your loan servicer to determine your loan eligibility. FedLoan Servicing currently gives a .25 percent reduction for auto debit on direct loans.
2. Pay While in School: Always remember that unsubsidized loans will accrue interest while in school. To keep your accrued interest to a minimum, direct payment towards these loans while in school to avoid inflation of these loan amounts. The same is also true when your loans are in deferment.
3. Prepayment: Take advantage of the fact that all education loans are prepayment penalty free. Whether private or federal loans, adding extra money to your monthly payment can help dramatically reduce your student loan balance. Remember to specify with you lender your intention to prepay, otherwise instead of the payment going to principal it will be viewed as an early installment on the next payment due.
4. Avoid Unnecessary Debt: Try to be frugal with how much loans you take out. Many students receive refunds checks when they take out loans, remember that these sums of money are not free and will have to be paid back. More is always less with student loans.
5. Rate Shop: Market rates are at historic lows, so it is likely that your rates could be significantly higher than what you could get on the market today. Check out Credible to see if you can lower your interest rate.
6. Lender Specific Benefits: Most federal loans offer income-driven repayment plans to help borrowers pay back their student debt. If you decide to refinance your student loans, there are some great secondary benefits such as entrepreneurship programs, career services, and philanthropic opportunities.
7. Student Loan Interest Tax: Depending on your financial situation, you may be eligible to take advantage of the student loan interest tax. $2,500 is the maximum deduction available if you meet the income eligibility requirements.
8. Repayment Forgiveness: Many careers offer repayment forgiveness programs on a state and federal level to help support high need communities. Many professions offer repayment programs such as teachers, nurses, lawyers, mbas, physicians and dentists.
9. Work Benefits Package: Be sure to check with your employer to see if loan repayment is a part of your benefits package. This is also something to keep in mind when searching and applying to companies for potential employment.
10. Refinance Only High Interest Loans: Some loans are not worth refinancing, however that shouldn’t mean you shouldn’t consider refinancing. If you have several loans with high interest, consider refinancing them to lower your monthly payment and long-term repayment savings.
11. Low Rates, Invest Over Prepay: If you have existing low interest rate loans, consider investing over prepaying. Forecast the amount you want to prepay on your loans and see the effect on your loan balance. If you feel as though you can make a higher return in an investment that may be worth considering.
12. Chat With an Advisor: Consulting with your financial advisor or the advising staff at your respective university is always a good idea to make sure that you stay in good standing on your student loans.