Tag Archive for: Repayment Success

As graduation season approaches, you may notice more and more ads promoting student loan refinance. You may also receive offers from companies offering to lower your rate on your student loans. What does all of this mean to you? Learn what your options are and create the student loan repayment strategy that makes sense for you.

What is Refinancing?

Refinancing means using a new loan with better interest rates and/or terms to pay off an existing loan. Refinancing is commonly used with home mortgages, but can also be a great option for your student loans. Check out When to Consider Refinancing Student Loans for additional insight into potential reasons you might consider refinancing your student loans.

Who Can Benefit from Refinancing Student Loans?

If your goal is to obtain a lower interest rate and ultimately lower the total repayment costs of your loans, then refinancing is worth exploring. This is especially true if you have older private loans that may have a high interest rate, and you feel you may qualify for a lower interest rate now. Some consumers may also want to lower their overall monthly payment. They can achieve this from either a lower interest rate, or by extending the term (i.e., length of repayment) on their loan. Finally, if you have multiple loans with different lenders or servicers, refinancing combines your loans into one. This means you’ll only have to work with one entity for your student loans in the future.

What Types of Loans Can Be Refinanced?

Most companies that offer student loan refinancing allow you to include private loans and federal student loans when refinancing. (Private loans are loans made by a bank or other financial services provider you received to help fund your education. Federal loans (i.e., Direct Loans, Stafford Loans, Perkins Loans) are made by the government.) To qualify, your loans may need to be in their grace period or in repayment to be included in a refinance loan. That means you need to be out of school when you refinance those loans. You can include multiple loans from a number of different loan holders in one refinance loan. Make sure you know all of the student loans you have, and which company or organization is responsible for servicing those loans before refinancing.

Considerations and Cautions Before Refinancing

While refinancing might sound good to you, there are some things you need to consider.

  • Don’t just look at the low teaser rates. The lowest advertised rate is usually available to borrowers with the best credit scores who select the shortest repayment term. These options may not work for your situation.
  • Understand who will actually service your new refinance loan. In many instances, the lender you initially work with may not be the organization you make payments to, or rely on for customer service.
  • If you are considering including federal loans in your refinance, ensure the benefits outweigh any loss of protections or benefits only available with federal loans. For instance, if you include federal loans in a new private refinance loan, you lose access to income-driven repayment plans and the possibility for Public Service Loan Forgiveness that might be available with your federal loans.

The bottom line is, do your research and understand what course of action is best for you. Each person has unique circumstances and concerns, so refinancing may not always be best. You can learn more about refinance loans and other related articles by visiting U-fi.com.

Interested in student loan refinancing? Take the next step toward lower monthly payments.

Congratulations! You’re graduating soon and will be searching for your first job out of college. It’s an exciting time in your life. However, if you’re like the majority of college students, you’re also graduating with student loan debt. Now is a good time to make sure you’ve got a plan to manage your student loans after you graduate.

Here are some easy steps you can take to set yourself up to successfully manage your student loans.

First, Identify All of Your Student Loans

The best place to start is at the National Student Loan Data System (NSLDS). You can find information here about all of your federal loans. This will give you all the details you need to understand how much you’ve borrowed on your federal loans. You can also find out who to contact for questions about your federal student loans.

If you used private loans from a bank or other financial entity, check with your lender to make sure you have the correct loan information.

Next, Get an Idea of What Your Monthly Payments Will Look Like

At StudentLoans.gov you can access a repayment estimator for your federal loans that will give you an idea of what your monthly payment would look like under the different repayment plans available. Depending on your individual circumstances, it’s likely there is a plan that will work for you. If you have relatively low debt and a good salary, you may want to pay off your loans ASAP. The standard 10-year repayment term allows you the quickest and lowest cost method to pay off your loans.

If you have a higher debt load or lower income, there are options that base your student loan payment on your income. Income-driven repayment plans are often helpful since they give you a more affordable monthly payment based on your income. You can learn more about these options as well as how to apply them to your student loans at StudentLoans.gov.

For private loans, visit your lender’s website to access repayment calculators. Or, simply contact your private loan provider for additional information on what monthly repayment amount you can expect.

Know When Your First Payment is Due

With federal loans, you have the ability to postpone payments while you’re enrolled in school at least a half-time. This is also true of some private loans. That means you’ve probably not made any payments on your loans, or perhaps you’ve made some small payments to offset accruing interest. You are also given a grace period on your loans. The grace period is typically six months from your last day of school. The last day is usually considered when you graduate or have dropped below half-time enrollment. At the end of that grace period is when your first payment will be due. Make sure you know when that due date is. That will give you plenty of time to prepare and budget for that new payment.

Know Your Options if you Have Difficulty Making Payments and Need Assistance

There are a number of options for borrowers who encounter situations that make it difficult to manage their student loans. Your student loan servicer will work with you to find a solution, but you have to contact your servicer to get assistance. For example, if your income has changed dramatically you might want to change to an income driven repayment plan or adjust the plan you’re on based on your change in income. Additionally, if you return to school, to pursue a graduate degree for example, you can postpone (or defer) your student loans while you’re back in school. Don’t make the mistake of simply ignoring your student loan payments and damaging your credit score.

As you look forward to graduation and starting a new chapter in your life, just remember to do a little planning and research how to best manage your student loans and find the best repayment plan for your situation. And remember, your student loan servicer is there to help you if you have any questions.

Does your January credit card statement have you feeling blue? Find out how personal loans could provide credit relief.

It Happens to the Best of Us

The holidays have come and gone. You may be feeling a bit relieved that all the seasonal hustle and bustle is over. Sure, it may be a bit cold outside. Sure, work is back in full swing. But, things are looking good with your New Year’s resolutions. You’re feeling optimistic and energized.

Then, you receive your January credit card bill. Whoa, the new balance is much higher than you expected. As you go down the list of purchases on your statement you ask yourself, “Did I really spend that much?” You also notice the available credit on your credit card is pretty low. There are some big purchases coming up in your future. You were planning on using your credit card to pay for them. Now, you no longer have enough available credit to pay for everything as planned.

With average credit card APRs over 16%, and many exceeding 20%, you know if you don’t pay your balance in full you’ll be hit with a hefty finance charge, which will be added to your outstanding credit card balance. And even worse, if you’re late making the minimum payment that’s due, you could be hit with a penalty APR, which can be as high as 29.99%.

Personal Loans Could Provide Credit Relief

This is where personal loans could provide credit relief. Unlike a credit card, which is a revolving line of credit, a personal loan is an unsecured loan that doesn’t require any collateral, such as a car or house. Personal loans come with a specific repayment period, usually between 1 and 7 years. Fixed interest rates are more common than variable interest rates, and some lenders will offer you a choice.

The main reason people take out personal loans is to pay off existing debt, such as high interest rate credit cards or loans. Other common reasons include making major purchases, for home improvement projects, for special occasions like weddings, to take a vacation, and to pay off medical bills.

Personal loans can range from as little as $1,000 to as high as $100,000. APRs vary widely among lenders and are based on the borrower’s (or co-signer’s) credit history, annual income, repayment term selected, and type of interest rate chosen. Some personal loans even come with money saving automatic payment discounts and loyalty discounts.

Tip: Some lenders charge upfront fees, which add to the total cost of the loan, so be sure to take that into account before choosing a lender.

A really nice feature for personal loans is how quick and easy the process can be. If you submit a completed loan application, you can receive a decision in a matter of minutes, and if approved, receive funds in your bank account as soon as the next business day, provided your application has no typos or errors.

Now that the holidays are over, you may be suffering from the post-holiday credit card blues. If so, check out a personal loan for credit relief from U-fi’s partner. It just may be what the doctor ordered.

If you have student loan debt, you have most likely heard the terms “student loan consolidation” and “student loan refinancing”. Although they sound similar and are often used interchangeably, they are actually two different programs. Therefore, understanding these programs and their key differences can help you make better student loan repayment decisions.

Student Loan Consolidation

Student loan consolidation lets you combine one or more eligible federal student loans into one new Direct Consolidation Loan. As a result, the U.S. Department of Education becomes the new lender. As the administrator of the program, they use companies such as Nelnet to originate and service the loans.

Student Loan Refinancing

Student loan refinancing is offered by private (non-federal) lenders to allow student loan borrowers to refinance one or more federal and/or private student loans into a new private student loan. Consequently, the lender of the new private student loan will be a bank, credit union, or other financial institution. Either the lender themselves or entities like Firstmark Services, a division of Nelnet, handles origination and servicing.

Which is Better?

Both programs offer many benefits. These benefits include simplifying your monthly student loan payments, locking in a fixed interest rate, and lowering your monthly payments. However, there may be some drawbacks as well. For example, if you extend your repayment term, you could increase the total cost of your loans. Therefore, you may forfeit current and potential future federal student loan benefits. Also, any incentives attached to your current loans, such as interest rate reductions for automatic payments, are lost.

Comparing Options

The table below provides a side-by-side comparison of several important features of student loan consolidation and student loan refinancing.

Student Loan ConsolidationStudent Loan Refinancing*
LenderU.S. Department of EducationBanks, Credit Unions, and Financial Institutions
Credit Check RequiredNoYes
Upfront FeesNoneMost lenders do not charge any upfront fees
Interest Rate TypeFixedFixed and variable rate options are offered by most lenders
Interest RateWeighted average interest rate of the loans being consolidated, rounded up to nearest one-eighth of 1%Varies. Factors may include the borrower’s and/or cosigner’s credit history; repayment term; interest rate type; highest level of education; and current market conditions
Repayment PlansStandard, Graduated, Extended, and various Income-Driven Repayment plansStandard Repayment
Repayment Term10 to 30 years depending on the amount being consolidated5 to 20 years
Allowable LoansMost federal student loans are eligible. Private loans are not eligibleFederal and private student loans are allowed by most lenders
Interest Rate ReductionRate reduction for automatic paymentsRate reduction for automatic payments. Some lenders offer an additional rate reduction to existing customers with a qualifying account
Ability to consolidate or refinance multiple timesGenerally no, unless additional federal loans are includedYes
Loss of Federal BenefitsSome benefits may be lostYes, including potentially qualifying for Public Service Loan Forgiveness on federal loans
When can you consolidate or refinanceAfter graduation, leaving school, or dropping below half-time enrollmentAfter graduation, leaving school, or dropping below half-time enrollment. Some lenders allow refinancing while in school

* Features represent those of the largest and/or most common private student loan refinancing programs. A specific lender’s features may differ, so be sure to read the program details carefully.

Choose the Right Option for You

While there are similarities between student loan consolidation and student loan refinancing, they are different programs with unique features. Firstly, if you are interested in consolidating or refinancing your current student loans,determine what you want to accomplish. Your goal may be to lower your monthly payments, lock in a low fixed interest rate, and/or lower your overall cost of repaying your loans. Next, compare the federal government’s Direct Consolidation Loan program to U-fi and other private lender programs once your goal has been set. Then, decide if consolidation or refinancing is right for you based on your financial goals and circumstances.

Want to reduce your monthly payments? Learn how to make it happen with U-fi.

With the numerous private student loan repayment options available, selecting the right one can seem a bit overwhelming. However, with a little bit of knowledge, you can make a more educated decision. In Part I of this article, we covered repayment plan options. Now, we’ll review interest rate types and repayment terms to find the best student loan option for you.

Interest Rate Type

Borrowers taking out private student loans or refinancing their current student loans have a few interest rate options.

  • Variable: Variable rate loans have an interest rate that can fluctuate over time as the rate index, such as the Prime Rate or LIBOR, goes up or down. Variable rate loans typically come with lower starting interest rates than comparable fixed rate loans. However, they come with greater risk, since rates may rise in the future. Most variable rate loans have a cap that places a limit on how high the rate can rise.
  • Fixed: With a fixed rate loan, once the rate is set, it does not change for the entire repayment period. Fixed rate loans normally have higher starting rates than variable rate loans. This is because the lender takes on the risk of interest rates fluctuating over time.
  • Hybrid: Another less popular option is a hybrid rate loan. With a hybrid rate loan, the interest rate is usually fixed for a period of time. It then switches to a variable rate for the remainder of the loan period.

Tip: If you intend to pay off your loans in a short period of time, consider a variable rate loan. If you plan to take longer to pay off your loans or prefer stable, predictable payments, a fixed-rate loan may be the best choice. When deciding which type of rate to choose, use the lender’s loan repayment calculator to estimate the savings between a variable rate and a fixed rate loan. Also decide whether the estimated savings is worth the additional risk of a variable rate loan.

Repayment Term

Another important item that determines the interest rate you will be charged is the repayment term you select. Most lenders offer private student loans and refinance loans with repayment terms between 5 and 15 years. Some lenders offer repayment terms as long as 20 years.

When determining interest rates on private student loans, remember that the shorter the repayment term, the lower the interest rate. This is because the lender takes on additional risk by allowing you to repay your loan over a longer term.

Tip: Your monthly payment amount is determined by several factors. These include the principal balance of the loan when you start making payments, the interest rate, and the repayment term. Shorter repayment terms come with lower interest rates, but higher monthly payments. Choose a repayment term with a monthly payment you can afford, especially when you are first starting out.

Choosing Your Best Option

Choosing the repayment option that best fits your current and future needs can be a bit tricky. But, with a little planning and thought, you can zero in on the loan terms that are best for you. If you find your financial situation changes down the road, and your current repayment terms no longer meet your needs, you may be able to work with your lender to modify your repayment terms. If that isn’t an option, then you can look at refinancing your student loans and replace them with a new loan that is a better fit.

Tip: Most private student loans do not have any pre-payment penalties or fees. If down the road you can afford to pay more than the minimum each month, you can pay down your loan faster without being charged any pre-payment fees. This reduces your overall cost of borrowing in the end.

Understanding the nuances of private student loans can make a big difference when deciding which one is right for you. Making the right choices when taking out student loans can have a strong impact on positioning yourself for a bright financial future.

If you graduated from college this year, you may realize just how much student loan debt you have. With the average student loan debt at around $29,000 per student, it can be overwhelming to see that number and you may wonder how you are going to pay it back. Well, take a deep breath: you have several options when it comes to repayment. Don’t hesitate to give your student loan servicer a call because they will help you work through your options. Or, you can also follow these 4 steps to get ready for student loan repayment. It’s important to investigate your options and be prepared. It’s equally important to know a few things you should avoid.

Deferment & Forbearance

Deferment and forbearance allow you to temporarily postpone making payments or can reduce your payment for a period of time. Sounds great, right? So, what’s the problem? Your student loans continue to accrue interest. That interest could cost you thousands of dollars a year, depending on your student loan debt. Don’t delay the inevitable. You will have to pay back your student loans whether you pay them now or pay them later. Deferment and forbearance are great options if you have no financial means when you enter repayment. However, you shouldn’t use them as a way to delay paying your student loans. If you do need to go this route, try to at least make interest payments on your loans. If you don’t, the interest will capitalize leading to higher student loan debt and higher monthly payments once your deferment or forbearance expires.

Don’t Miss Payments

Make your payments every month and on time. If a loan payment is not made by the due date, the loan becomes delinquent until payment is received. Depending on your servicer or lender, this delinquency can affect your credit report as a negative mark, therefore negatively affecting your credit score. In addition, when you miss monthly payments, your payment will double, then triple, and continue to snowball which may put you in a situation that’s difficult to catch up on.

Avoid Scams

We’ve all heard the saying, “if it sounds too good to be true, it probably is.” It may seem enticing to pay a company to handle the stress of your student loans and promise you low payments or loan forgiveness, which are why these companies exist, but you’ll be wasting your money. Student loan servicers and lenders will not charge fees for finding a repayment plan that fits your needs. The U.S. Department of Education offers several student loan repayment plans and loan forgiveness, cancellation, or discharge for certain circumstances, but all of their services are free of charge.

Being prepared for repayment and understanding what you should avoid are two big steps to successfully paying off your student loans. Just remember, your student loan servicer is there to help you. If you need to adjust your repayment plan or just have questions about your student loans, give them a call (844.307.3451).

You may have heard about private student loans. Some information about private loans is like a Bigfoot sighting. There are a lot of stories, but they often aren’t based on facts. In this article, we’ll look at each private loan myth and give you the facts.

Private Loan Myth #1: Private Student Loans Only Offer Variable Interest Rates

One of the most common myths about private student loans is that they’re only available with riskier variable interest rates. In reality, most private loan providers offer borrowers a choice between a fixed interest rate and a variable interest rate. Depending on your individual circumstances, one may be more appealing than the other. Read more about choosing a variable or fixed interest rate to see what important factors should be considered when choosing your type of interest rate. Additionally, highly qualified borrowers can likely find private student loans with low interest rate options.

Private Loan Myth #2: Private Student Loans Have High Origination or Application Fees

The reality is that most private loan providers currently charge NO upfront fees, also known as origination or application fees. There is no fee to make extra payments or to pay off loans early. Although most loan providers offer loans with no upfront fees, research your options. Be sure to verify any fees or charges associated with loan products.

Private Loan Myth #3: Private Student Loans Require Immediate Repayment While You are Still in School

As a borrower, you have various repayment options offered by different private loan providers. Most lenders have an option to delay or postpone payments while enrolled at least half-time. They also offer a six-month grace period following your graduation or last date of at least half-time enrollment. This gives you the option to not make payments while enrolled in school as long as you are enrolled on at least a half-time basis. This can give you some added flexibility while you are focused on your studies. However, if you can make payments in school, even if only the accruing interest, you can save money and keep your loan costs lower. You can find additional ways to save money on your student loans here.

Private Loan Myth #4: Private Student Loans Have No Deferment or Forbearance Options if You Have Difficulty Making Payments

Most lenders offer options to postpone payments if you encounter some type of financial hardship. (You may want to check to be sure.) Most private loan lenders provide a hardship forbearance to temporarily postpone payments if you find it difficult to make payments.

Many private loan lenders also offer deferments. Deferments can postpone payments for certain circumstances. These circumstances include returning to school, having an internship or residency, or during other approved events. Again, check with your private loan lenders to see what options are specifically available.

Private Loan Myth #5: Federal Student Loans are Always Cheaper than Private Student Loans

As a general rule, explore your federal student loan options first before taking out any private loans. Federal student loans will typically provide you a greater degree of flexibility with repayment options and various forgiveness provisions. You can read a good overview of federal and private student loans here.

However, many private student loans can have interest rates as low as or even lower than federal student loans. Federal student loans also have a nominal origination fee charged to borrowers. As discussed earlier, most private loans do not have any origination or application fees. Several lenders now offer private loans designed specifically for parents for their students’ educational expenses. Parents find these loan options often have lower interest rates compared to federal Parent PLUS loans.

We hope you have a better understanding of private student loans and are better equipped to make informed decisions regarding your education financing options. Research your options to find what works best for your individual circumstances and don’t believe every myth you hear. But, if you happen to see Bigfoot in the cafeteria on campus, snap a pic. You just might be able to sell it and pay off your student loans!

Whether entering college after high school or transitioning from full-time employment, your financial picture will change as a student. The summer is a good time to prepare for that change. College may be the first time you manage finances on your own. Or, you may be cutting back on your work hours and living on a lower income while attending school. Either way, these six tips for understanding education costs can help you develop a financial plan for the months ahead.

Create a Budget

Maybe you’re coming to school with money you’ve saved for personal expenses. Perhaps you have a family-provided bank account. Maybe you have financial aid designated for living costs. Either way, you probably have a lump sum which needs to last throughout the term. Establishing a budget that considers your available funds and expenses helps stretch that money instead of spending it upfront. Budgets take self-discipline and planning, but they are well worth the effort. They can play a big part in understanding education costs. Use this helpful budget worksheet to get started.

Don’t Borrow More Than You Need

Student loans come primarily from federal or private sources. After federal loan funds are exhausted, some students turn to private student loans to help cover expenses. Student loans provide money to help with college costs. But, you need to repay those funds with interest after you leave school. It’s sometimes easy for students to develop an, “I’ll worry about that tomorrow” attitude about borrowing. They often take out more than they need. While they are a good investment in your education, loans can add up. They can become a large financial commitment for years after you leave school. This is especially true if you start using student loans for living expenses. Our advice: only borrow what you need for college bills.

Work Part-Time While You’re in School

A big part of understanding education costs is realizing what you need. Getting a part-time job can bring money in on a regular basis while you’re in school. It can also keep you from using student loans or credit cards to cover personal expenses. There are two different types of jobs: Federal Work-Study, which would have been included on your financial aid award letter, or a part-time job that you obtain on your own. Colleges often have job boards that identify positions as one or the other. You can also look on local job websites for part-time employment. Businesses in college towns often rely on students as a part-time workforce. Concerned about work conflicting with your coursework? Studies show students who work less than 20 hours a week actually do better academically. They are also more likely to graduate.

Be Careful with Credit Cards

College students often receive credit card offers in the mail, online, and at concerts and events. Those free t-shirts and travel mile offers entice new banking customers, but they may not be worth it. While wise use of credit is a move toward financial independence, overuse of credit can cause financial pressure. It can compete with your academic and financial goals. Read the small print, take out the best rate with the lowest fees, and use credit sparingly, if at all. If you do decide to take out a credit card, the best way to use credit is to pay it off completely every month. That way, you can develop a positive credit history, but not accrue interest and fees that can take years to repay.

Understand Your Financial Aid

Students who go directly to college from high school often rely on parents to complete financial aid forms, review financial aid, and pay college bills. However, understanding education costs is an important part of knowing you are responsible for keeping that financial aid. You must make Satisfactory Academic Progress, get a job, if eligible, for Federal Work-Study, and repay the loan you have taken out. When you are in school, the financial aid office will reach out to you to take action or answer questions about your financial aid. It’s important for you to understand your financial aid and the corresponding responsibilities.

Protect Your Personal Information

As a student, you may be a primary target of identity theft. Students tend to be more trusting, have new and unblemished credit, and are unfamiliar with the ways their information can be compromised. Be sure to protect personal information like your Social Security number, date of birth, driver’s license number, bank account numbers, PIN numbers, and other related information. Avoid shopping online on public computers and keep personal documents and information in highly secure places. More helpful tips are located in this How to Avoid Identity Theft fact sheet.

Although your income will be lower when you are a college student, you’re certainly not alone. Your classmates are in the same situation, struggling with understanding education costs. As a general rule, think of the long run instead of just current wants or needs when making financial decisions. If you make smart financial decisions while attending school, you can use your college years to form a strong foundation for the future, both academically and financially.

Don’t let your student loan statement be a surprise in the mail. Be prepared for student loan repayment by asking yourself these three questions:

1. Who are your loan servicers?

When you take out student loans from the federal government, you will be assigned a student loan servicer by the U.S. Department of Education. If you have private student loans, the servicer will be assigned directly by the lender. Your student loan servicer is who you will work with to make payments on your student loans. They can also help you understand your student loan repayment options, and answer any other questions you may have. If you have multiple student loans, you may have multiple loan servicers. Visit nslds.ed.gov to look up your federal student loan servicers if you don’t know them. For private loans, contact your lender.

2. How much are your monthly payments and when are they due?

Now that you know who your loan servicers are and where to send payments, you need to know how much to send and when. For federal student loans, there’s generally a six-month grace period after graduation before your first student loan payment is due. By this point, your servicer already put together a student loan repayment schedule. This schedule shows you how much your monthly payments are.

You should receive a statement from your servicer three to four weeks before your payment is due. Make sure your servicer receives your payment by the due date. If you don’t make a loan payment by the due date, the loan is delinquent until you make a payment. Depending on your servicer or lender, this delinquency may be put on your credit report and negatively affect your credit score. Most servicers and lenders offer auto debit, meaning your monthly payment is taken directly from the account you specify on the due date. By doing this you can ensure your payments are never late. Some lenders even offer incentives, like interest rate reduction, for this type of payment.

3. What are my repayment options?

Your federal loans are automatically in a standard, 10-year repayment plan if you have not specified otherwise. If you find that the payments are more than you can afford, there are other options to explore. Federal student loans have several repayment options to help you repay your student loans. Call your student loan servicer and they will help you work through your options.

You can also consider refinancing or consolidating your student loans into one payment. If you have more than one servicer or lender, you will be making multiple payments every month. By consolidating or refinancing, you can make one monthly payment to one servicer. Consolidation will combine your federal student loans into a new loan so you have a single monthly payment. Refinancing can combine both your federal and private student loans into a new loan, with a new interest rate and term. Student loan consolidation and refinancing is not for everyone, so make sure you understand the pros and cons of each.

Following the basic steps outlined above will set you up for successful student loan repayment. Remember that your student loan servicer is there to help, so never hesitate to reach out if you have questions.

Undergraduate students graduate with an average of $30,000 in student loan debt. This amount can feel overwhelming. However, there are several tips for saving money on student loans. You can do it while you are in school and after you graduate.

Saving Money on Student Loans Step 1: Only Borrow What You Need

The first step is to only borrow what you need to cover your college costs. Many students over-borrow and end up with more student loan debt than they are able to pay back after graduation. Grants and scholarships usually don’t have to be paid back as long as you continue to meet their requirements. However, these forms of financial aid generally won’t cover all of your college costs. Looking at your federal loan options is your next step. Federal loans will have to be paid back with interest. However, they usually offer borrowers lower interest rates and more flexible terms. Make sure you take advantage of these options before considering a private student loan. Private student loans are a great option when you’ve exhausted all federal aid options and still have college expenses. As with any loan, make sure you understand the terms and conditions.

Saving Money on Student Loans Step 2: Make In-School Payments

The second way to save money on your student loans is to make payments while in school. Most loans will give you a deferred payment option. This means you don’t have to make any payments on your student loans while you’re in school or during your grace period. While it sounds like a good option, interest accrues on your loans during this time. That could mean a larger bill at repayment. If you budget to make full principal and interest payments while still in school, you’ll save the most money over the life of the loan, but that isn’t always feasible for everyone. Another great way to save money is to make interest-only payments while in school. This monthly payment will be much less than a full principal and interest payment, but will set you up for success when you get to repayment.

Entering Repayment

Once you graduate your loans will go into repayment following your grace period. That means you will start making payments toward your full principal and interest payments until the loans are paid off. Federal loans have several repayment options to fit your budget, but keep in mind the lower your payment and the longer your loan term the more interest you will pay over the life of the loan. Make sure you are aware of and take advantage of any borrower benefits your loan servicer offers, such as a lowered interest rate for auto-debit payments.

Refinancing or consolidating your student loans may also be a good option for you.

These are a few of the main ways to save yourself money on your student loans while you’re in school and after you graduate. Knowing your options and paying what you can along the way will set you up for a successful future, free from student loans.