The growing tuition costs in the US are a major concern as is obvious from the fact that student loan debt in the country has exceeded $1.5 trillion. And only a decade ago it was at $600 billion. Thousands of students today have to take out loans to pay for their education. Moreover, many of them drop out before actually getting their degrees, all because of the stress and debts (The Atlantic). Today, a person using a student loan, has to get proactive and start paying it off while still in school. Clever money management is key to this and can help you reduce the risk of getting swamped in debt before you even leave college.
3 Efficient Tips on How to Start Paying Off a Student Loan While in School
1. Create a budget
It’s essential for any person who wants to be confident in their finances to have a budget. As college students usually have limited funds, budgeting is even more important to ensure you use every cent wisely.
However, you need to not only use a budgeting app to keep track of your expenses. You need to make a point in your budget to set aside a small sum for student loan payments. The best way to go about this is to save a small amount weekly or monthly.
In addition to this, you should keep a close watch on your spending. The budget, especially one created by an app that monitors your finances live, will show you where you can cut your spending. Studying diagrams of your monthly reports can be a great motivator to develop some healthier habits.
2. Research and compare your financial options
To start paying off a student loan while in school and avoid an insurmountable debt, you should choose the best kind of loan for you. Before this, you should look into all scholarships or financial aid options you might have.
The first task is to cut your college expenses as much as possible. After this, you’ll need to do calculations so you know how much money you actually need to borrow. Next, start hunting for loan options that meet your requirements. Finally, compare the shortlist of the best lenders you find.
Note that you should look not only on the interest rates, but also the reliability of the lender, extra terms, and fine print of the contract. Only work with trusted lenders as you can be confident that they won’t change interest rates to unreasonable or set some other demands included through loopholes. Extra benefits vary from lender to lender. Credit Union One student loans include perks like 0% disbursement fees and a very simple application process. Good student loans also give you a choice to choose between fixed and variable interest rates. In addition, they have flexible repayment options.
Make sure to read the contract very carefully before taking your loan. If necessary, consult an expert to help you understand every detail of the document. This will help you avoid student loan scams.
3. Readjust your loan amount upon graduation
If you want to start paying off a student loan while in school, your biggest contribution might be after graduation. At this point, you might be able to refund money you didn’t actually need for school.
Surprisingly, quite often people borrow a larger amount than they originally thought necessary. This refund along with your gradual repayment over the college years, can make a big dent in your debt.
You should also see if you can renegotiate the terms of the loan at this point. As the financial situation is constantly changing, you might be able to get lower rates or better repayment terms. Masking even small payments on the loan during your study years will help win approval for these changes.