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Finances can be especially tight during the first few months after graduation. Even if you’re lucky to get a job immediately, chances are you’ll be earning a starting salary. That has to cover your rent, food, and utility costs. Most new grads barely have enough money left over to cover their loan repayments. However, those loan repayments will become due sooner than you know it. You don’t want to be caught unprepared when they do.
Exploring different ways to save money on your student loans will help to lower the monthly repayments and make them more affordable. We’ve put together a few tips on how to save the most money on student loans.
1. Take An Inventory Of Your Student Loans
The first step toward saving money on our student loans is to take an inventory of your total debt. You can’t create a plan without first knowing when the payments become due and how much you will owe every month.
Create an excel sheet listing all your loans. Against each loan mention if it is a federal or private student loan. Also list the total loan amount, interest rate, monthly repayment amount, and duration of the loan.
This overview of your total student loan debt will make it easier to plan a payment strategy and save money on your student loans.
2. Start Making Payments As Soon As You Can
Student loans typically have a grace period of 6 months after graduation. Your repayments will start when this 6-month grace period ends. While you’re not required to start repayments during this time, interest continues to accrue on your loans. This can add up to a significant amount over the loan term.
If you have some free cash, use it to start making your repayments before the grace period ends. This one single strategy will save you a lot of money by way of interest accrual. It will also lower your repayment timeline so you’ll be debt-free faster.
3. Sign Up For Monthly Autopay
This is one of the simplest ways to save money on student loans as a new college graduate. Autopay involves transferring your loan repayments directly from your bank account to the lender’s account. You set it up once and the money gets transferred every month on a set day of the month.
Lenders encourage borrowers to set up automatic payments as it ensures that they’ll get their payments on time. As an incentive, they offer a 0.25% rate discount just for signing up for autopay. It may seem like a small amount but it adds up to decent savings over the life of the loan.
An added benefit of autopay is that you won’t need to keep track of the payment deadlines, which is one less thing to worry about.
4. Pay More Than the Minimum Each Month
Go through your monthly income and expenses. Do you have spare cash left over every month after paying off all expenses? If you do, consider paying more than the minimum amount due every month. Make sure to tell the lender to put the early payments toward the principal and not the interest. Paying down the principal will help to lower the amount of interest that accrues every month thereafter. This can add up to significant savings.
5. Consider Paying Off Your High-Interest Loans First
Interest accrual adds a significant amount to the cost of the loan. The higher the interest rate, the more expensive your loan. If you can pay more than the minimum every month, it’s a good idea to put the extra money toward paying off your highest-interest loan first. When that loan is cleared, put the next payments toward paying off the loan with the second-highest interest rate.
Paying off your high-interest loans first will help you save a substantial sum on interest over the loan term.
6. Look For A Job That Pays Off Student Loans
Many organizations have various types of student loan repayment assistance programs. These programs are designed to ease the burden of student loan debt on their employees. Government agencies also offer student loan repayment assistance to employees who work in public defense, low-income schools, healthcare, and the armed forces. The exact specifications of each program may vary among employers but they are definitely worth looking into. Getting part of your loan paid off by your employer can help you save a lot of money on student loans.
7. Refinance Student Loans At A Lower Interest Rate
If you have a good credit score, consider refinancing your student loans. Refinancing at a lower rate is the best way to save money on your loans. The only condition is you need to have a good score to qualify for the lower interest rate.
When you apply for refinancing, lenders quote an interest rate based on your credit score. The higher your score, the lower the interest rate you’ll qualify for.
Check your credit score and use a Student Loan Refinance Calculator to determine how much you can save by refinancing your loan. If your credit score doesn’t qualify you for a lower interest rate, consider refinancing with a credit-worthy cosigner. In this case, the lender will quote a lower interest rate based on your cosigner’s credit score.
8. Get Organized To Stay On Top Of Your Student Loan Repayments
The one thing that can drive up the cost of your student loans is late payments. If you miss the due date for whatever reason, the lender will charge you a late fee and interest on the outstanding amount. The interest will be calculated until you’ve paid the balance in full. The late fees and interest will make your student loans more expensive.
To avoid the extra payments and save money on student loans, you must find a way to stay on top of your payment deadlines. Setting up automatic payments is one solution. If that doesn’t work for you, consider another failsafe way to set due date reminders every month.
Use College Raptor’s new Student Loan Finder to discover personalized private loans. Compare lenders and interest rates to find a private loan option that
