X

College & Career Training in Alaska

10Sep

One Big Reason to Make Loan Payments In School: Why pay when you don’t have to? To save money!

If loans are part of your plan for college or career training, the first way to save is to do your research and pick the best loan. But there’s another secret to big savings: payments in school.

Some loans require payments while you’re in school – others offer in-school deferments, meaning you can wait until after you stop attending to start repayment. So why make payments if you don’t have to? To save money, of course!

If you have subsidized federal loans, in-school interest is paid by the federal government, but making small payments every month – perhaps $25 or $50 – reduces your balance, meaning lower required payments after you leave school, and a lower overall cost.

If you have unsubsidized loans, optional in-school payments pay off even more: Interest accrues while you’re in school – meaning that by the time you need to start repayment, the loan balance is already higher than it was when you took out the loan. Payments in school, even if only for the interest accruing, keep that balance lower.

Other benefits to in-school payments? You’re developing good repayment habits, which can make it easier to transition to repayment, and help your credit profile. And, some lenders (including the State of Alaska) offer additional perks, such as an interest rate reduction if you sign up for automatic payments while in-school.

 

Want to learn about other ways to save after you’ve borrowed? Check out our blog post on refinance.

About the Author

Related

FAFSA is completed, now what? It's all about the SAR

FAFSA is completed, now what? It's all about the SAR

You spent time prepping for the FAFSA and NOW you actually completed it! Yay! Now what? Within 3 to ...

Read More >
Where’s My Financial Aid? Important Dates and Deadlines and Where to Find Them

Where’s My Financial Aid? Important Dates and Deadlines and Where to Find Them

Answers to some common questions and themes regarding financial aid for students heading back to col...

Read More >
Resources for the Fall Semester

Resources for the Fall Semester

Navigating your path to postsecondary education can be confusing and challenging under ordinary circ...

Read More >
Scholarship Applications - How Things You've Learned Connect to Future Opportunities!

Scholarship Applications - How Things You've Learned Connect to Future Opportunities!

When I was a high school senior, I had no idea what to write on scholarship applications. I grew up ...

Read More >
4 easy tips to getting your FSA ID without stress. (Hint: you need this to file your FAFSA)

4 easy tips to getting your FSA ID without stress. (Hint: you need this to file your FAFSA)

As of October 1st the 2019-20 Free Application for Federal Student Aid (FAFSA) is available online. ...

Read More >
FAFSA Season is Upon Us!

FAFSA Season is Upon Us!

Today, October 1, is the first day that you will be able to complete your 2020-2021 FAFSA. Whether ...

Read More >