If you’re like most college students, you’re probably living on a shoestring budget while you’re getting your education. So, just the thought of paying back your student loans while you’re still in school probably feels like the ultimate pipedream.
Even if you’re one of the over 40 percent of full-time students and 70 percent of part-time students that work during college, after paying for food, housing and other necessities you may not have much to spare.
Nevertheless, there are a few ways you can whittle away at your debt while you’re still in school. By following these few simple budgeting tips, you can take control of your student debt before ever earning your diploma.
Here’s something to consider: a student loan taken out during your freshman year could accrue hundreds or thousands of dollars in interest by the time you’re ready to graduate. While most federal student loans won’t accrue interest while you’re attending school, some federal loans – and most private loans – will build interest from day one.
This makes it wise to set aside enough money each month to pay down the interest, and avoid larger monthly payments once you’ve started your career. Whether it’s $5, $10 or whatever you can afford, a little bit can go a long way when it comes to paying down interest that’s accruing on your loan.
When you’ve been approved for a student loan, your loan will be disbursed to the school you’re attending to pay for tuition, books and other school-related items. Sometimes these costs turn out to be less than the amount you were approved for, and as a result, your school will send you the remaining loan balance in the form of a refund check.
If you find yourself in this situation and you’re not in dire need of more financial help, you might consider sending the refund to your loan servicer to reduce your balance owed. This can usually be done through your school’s financial aid office or directly through your lender. And it will ultimately help you in the long run when it’s time to start repaying your student loans.
Certain college programs can be challenging and time consuming, which makes having a job while you’re in school difficult. Still, there are a few ways you can make a decent supplementary income, even if you’re bogged down with studying and exams.
By investing a few hours a week on small projects, most college students have been able to put together enough money to pay down interest or stay ahead of their loan’s grace period by paying down the balance a little bit at a time.
From paid internships that only require 10 hours a week to odd jobs around the campus, you might be surprised how much money you can put together over a 30-day period. And if you’re disciplined with your expenses and budgeting, you could potentially make a dent – even if it’s a small one – in your student loan balance.
It’s not uncommon for college students to take out more than one student loan to get through school. Whenever you have multiple student loans waiting for you to graduate so you can start the repayment process, it’s sometimes wise to choose the one that has the highest interest rate and begin paying that one off first.
Another option if you have multiple student loans is consolidation, where you take two or more loans and convert them into a single loan and a single monthly payment. Not only will this simplify the repayment process immediately, it often ends up saving you money right away, even if you’re still in school.
If you know you’re going to have enough money each month to start repaying your student loans, whether you’re still in school or graduated, most loan experts will tell you that setting up automatic payments helps a great deal. In some cases, you might even get a small discount on your interest rate by doing so.
The nice thing about having automatic payments set up is that you don’t have to set a reminder in your calendar each month to make your payments. And for anyone who’s ever gone to school or is starting out their career post-education, anything that makes your finances easier to manage is priceless.
Want more information on repaying your student loans? Check out our recent article on “How to Get Started on Repaying Student Loans” to explore more tips from our student loan experts.