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Taking out student loans can provide you with the opportunity to earn a degree, learn a trade, and improve job prospects. In other words, the benefits you’ll gain in the long run make borrowing well worthwhile.
What’s even better is that there are myriad ways to save money when you take out student loans, as well as when you start to pay them back. Here are some money-saving hacks every student should know about.
- Be frugal
It’s always best to borrow as little money as possible. There’s no shame in taking advantage of any student loan funds you’re eligible for, but the less you borrow, the less you have to repay down the road. Sure, it’s tempting to use your extra funds for a spring break vacation, but remember you’ll have to pay interest on that trip later on.
- Refi high-interest loans
When you apply for and accept student loans to pay for college, you may end up with a combination of both federal and private loans at a variety of interest rates. If you can, it’s best to pay off the high-interest loans first to avoid extra expense.
However, you might also consider refinancing your student loans. You just have to make sure it makes sense to do so. This means crunching numbers to see whether or not the savings you’ll enjoy are worth the expense of refinancing.
- Automatic payments
Many lenders offer incentives to borrowers that set up an automated payment schedule and allow funds to be automatically withdrawn from their bank account each month (or more frequently). To find out if you’re eligible for any discounts associated with automatic payments, simply check in with your loan service. Then there are companies like Ameritech Financial that help you to lower and refinance your student loan debt which is gaining a lot of popularity with recent college graduates.
- Paying on principle
There’s absolutely nothing wrong with paying the minimum on your loan payments every month. This is the required amount to avoid delinquency and paying it diligently is essential to improving your credit rating.
You may not realize, however, that you can also apply additional funds to the principle owed in order to reduce debt faster and shave some money off your interest payments over time. You just have to make sure to note that any extra you pay should go toward the principle so that it isn’t mistakenly applied to your next payment due (including interest).
- Taking advantage of applicable benefits
You may be able to take advantage of tax deductions based on your interest payments on student loans, so you should definitely discuss the prospect with your tax advisor or contact the IRS to ask if you are eligible.
You might also qualify for federal or state repayment forgiveness programs, depending on your major and where you live. In addition, many companies offer some form of education reimbursement as part of a benefits package. You may be surprised by the benefits available to you through government programs and employment opportunities, and all you have to do is look for them.
