You can find several ways to save on your student loans. For instance, you can pay interest during your enrollment period, get student loan discounts, accelerate your repayments, qualify for a lower interest rate, and others.
When people talk about saving on student loans, sometimes, they mean decreasing the loan payment. Other times too, they mean reducing the student loan cost. But these two saving types are pretty different from each other and may conflict with one another. You should try Florida Car Title Loans.
For example, a lower monthly repayment will cost more over the student loan life. However, the higher monthly loan payment will decrease the overall interest paid.
Now, let’s find out the steps for saving on student loans in detail.
Table of Contents
1. Make Use Of Student Loan Discounts
Student loan discounts help you save money by giving you a reduction on the interest rate or cash back as a reward.
The standard type of loan discount is an AutoPay discount. And with that, the loan lender decreases the rate by 0.25% or 0.50%. Of course, only if you agree to have your monthly payments automatically deducted and transferred to your lender.
Another name you’ll usually hear for AutoPay is Auto-Debit.
Some loan lenders offer a cash reward for referrals. They apply this reward to your loan balance when your friend acquires a loan from the lender.
Other discounts are less common, such as rewards for graduating and good grates, including current customer discounts.
2. Make Payments During The Grace period.
If possible, get ahead of your repayment schedule during the grace period on your loan or while you’re in school. When you do that, you can decrease the overall interest over time. And that can save you money while you pay back your student loans.
Usually, your interest doesn’t start accruing unless your grace periods end if you have a subsidized student loan. But that’s not the case with unsubsidized loans and private loans. The interest starts piling up the moment your loan gets disbursed.
If you don’t make payments during the grace period, remember that you may pay interest on that interest in the future. So try as much as possible to make interest payments during the grace period.
It’s much better to make total payments on the principal balance. So think about it if it’s possible.
3. Refinance Your Student Loans
If you refinance your student loans, you can save a considerable amount of money. But, of course, you need to have an excellent credit score to get a lower interest rate. If not, you can choose a cosigner with a good credit score.
However, refinancing your student loans comes with its drawbacks. For example, if you have federal student loans, you’ll convert them to private loans when you refinance. And that means losing access to student loan forgiveness and other government-funded repayment programs like Public Service Loan Forgiveness, teacher loan forgiveness, etc.
Plus, should you decide to extend the term of your student loan, you’ll increase the overall cost with time. But if you’re sure that you can pay back your loans and don’t need any federal loan benefits, you can go ahead.
However, you need to take your time to look around for the best refinancing rate to save you money and reduce your monthly payment.
4. Accelerate Your Student Loan Repayment
Generally, you should opt for the repayment plan with the highest payment every month, which you can afford. For example, it’s better to use the standard 10-year repayment plan than the graduated repayment, extended repayment, or income-driven repayment.
If you still have extra money available every month, you can make additional payments on your loans. You don’t incur any prepayment penalties, so nothing should stop you from doing so.
You can pay off your student loans faster if you make extra payments. And that will decrease the total payments over the loan life, thus saving money on interest.
You can choose several ways to know which loan gets the additional payments. One good option is the avalanche method, where you apply any extra payment to the loan with the highest interest rate. Doing that can save you the most money.
Ensure to inform your lender to apply the additional payment to the loan with the highest interest rate. The best way to do that is to specify the student loan ID number. If you don’t do that, the lender will choose the loan that gets the extra payment.
Some lenders will spread the extra payments evenly among all your student loans. Some will even send the loan to the one with the lowest interest rate. So it’s best to inform them.
The above strategies can help you save money on your student loans while you repay them. However, if, for some reason, none of them works out, you can opt for student loan forgiveness if you have federal loans.
But before you proceed, we recommend that you talk to a student loan expert. They can show you the best possible route to take, depending on your situation.