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How Can I Save Money on My Student Loans?

When you take out student loans or start to repay them, you might see a number that feels intimidating, showing what you’ll owe for the next several years. And that’s all there is to it, right? You just have to accept it? Not necessarily. If you are a little savvy, you might actually be able to shrink that number and save money over the life of the loans.

 

Here Are a Few Ways You Might Be Able to Save Money on Your Student Loans

Make Payments During Your Grace Period

When you’re still enrolled in school and for the first six months after, you are not obliged to make loan payments. This six-month period is called your “grace period.” It’s like the Federal Government is giving you a chance to get out in the working world and get started in your career before telling you it’s time to pay back what you owe. But why not start your new job by budgeting out your student loan payments from your check right away? Waive the grace period and get right to repayment; it will save you money in the long run.

If you have subsidized loans, the interest doesn’t begin to accrue until after you’re finished with school, but if they are unsubsidized loans, the interest will start to add up as soon as the loan is disbursed. This is why it’s a good idea to pay at least the interest during your grace period, or even while you are in school to stop it from capitalizing and costing you even more.

Re-Evaluate Whether You Can Pay More

As circumstances in your life change, it’s a good idea to reconsider what you pay on your loans each month. For example, maybe you just moved in with someone and will have to pay less rent each month or you started a new job that pays more than your old one. Both situations could be examples of circumstances that free up more money for your loan payments and help you pay off your debt faster.

In addition, if you start to earn more money and have been paying your loans on an income-driven plan, it may be time to switch to a standard or other type of repayment plan. This is because income-driven plans offer lower, more affordable payments based off of your income. If you can afford to pay more, do so to pay debt off more quickly.

Take Advantage of Tax Deductions

Did you know the interest you pay on your student loans is probably tax-deductible? In most cases, you can deduct up to $2,500 in student loan interest on your federal income taxes. If you paid interest on student loans over the year, you should receive a 1098-E form from the loan servicer at the end of the year that shows how much you paid. If you don’t receive this form, give the servicer a call to find out why. The IRS has an online tool to help you determine whether you qualify to deduct your student loan interest on your taxes.

Sign Up For Auto-Pay

Find out if your lender offers a discount if you sign up for auto-pay. Most offer an interest deduction of 0.25%. Not only will you save money with that discount, but you won’t have to worry about missing a payment and possibly incurring late penalties.

See If You Might Qualify for Loan Forgiveness

There are some federal programs that you may qualify for that offer loan forgiveness after a required number of qualifying payments are made. Under the Public Service Loan Forgiveness Program, you might qualify for loan forgiveness if you have a job with a government agency or a nonprofit organization. For example, let’s say you’re employed as a full-time Medical Assistant at a nonprofit clinic. If you make your monthly payments on time, meaning no more than 15 days late for the full amount every month, after 10 years you could qualify for loan forgiveness; your remaining balance would be forgiven!

 

If you want to train for a new career at a school that cares about your success both during and after school, contact Charter College today. Learn about our programs in business, healthcare, information technology, and more.

Note: Student loan assistance should be free! You should never pay for help with information about your student loans.