Figuring out how to start paying off student loans while in school can also help you establish good financial habits early in your adult life.
It can help you budget your income in a way to prioritize your interest-only payments, and those monthly payments will also be reported to the credit bureaus, so you’ll also be able to establish your credit history. This will come in handy after you graduate and want to buy a car or a home or even just get a credit card.
Having a student loan repayment strategy is important, and deciding how to go about it will affect how much you save and how fast you can pay off your student loan debt. Here are the best ways to approach your goal of paying student loans while you’re still in school:
- Create a monthly budget
- Pay off high-interest loans first
- Set up automatic payments
- Choose a side hustle
Create a Budget
Creating a budget in college is important and can help you organize your finances to make sure you’re setting aside money every month to pay off student loans. Start by writing down your income from all sources and your typical monthly expenses, then look for opportunities to cut back in certain areas, so you can make room for student loan payments.
You can do this on your own or use one of several budgeting apps to set up and track your budget.
Pay Off High-Interest Loans First
If you don’t have enough cash flow to pay all of your accruing interest, prioritize the loans with the highest interest rates first. These are the loans that will end up costing you the most if you let the interest capitalize instead of paying it while in school.
If you’re wondering which student loans to pay first , log in to your account with your loan servicer or lender and review each loan’s terms to decide.
Set Up Automatic Online Payments
Setting up autopay for your loans will make them easier to manage because you won’t have to worry about making manual payments every month. What’s more, most federal loan servicers and private lenders offer interest rate discounts to borrowers who set up automatic payments, so you may also save a little money along the way.
Get a Job or Side Hustle
Finding a part-time job or a side hustle while you’re in school can take some extra planning with your coursework and social life. But with the right strategy, you can use the extra income that you earn to pay down your student loans faster.
It’s also a good idea to work full-time during the summer if possible, so you can reduce your reliance on student loans https://tennesseetitleloans.net/cities/mckenzie/ throughout the school year.
Consider Student Loan Refinancing
If you’ve been making student loan payments while in school and your goal is to pay off your student loans early, refinancing your student debt after you graduate can be a great way to help you save even more.
Student loan refinancing involves replacing your current loans with a new one through a private lender. The benefits of refinancing student loans can include lower monthly payments, lower interest rates, scheduling flexibility and more.
And the effort that you put in during college could help you meet the student loan refinancing eligibility requirements after graduation. In some cases, you may even be able to refinance while in school , though options can be limited because most lenders require that you have a bachelor’s degree to get approved.
Use ELFI’s student loan refinancing calculator to get an idea of how much you can save and whether refinancing is the right choice for you.*