A Study Guide to Save Money on Your Student Loan

The cost of higher education is rising and all it seems to do is continue to rise. The national student debt, like all other debts, is on the rise. The price tag alone is enough to make people decide not to go to college. Do not be one of those people. Even with the rising costs, there is still a lot of value in a college degree. The good news is there are ways for you to get money to help you pay for college. One of them is a personal loan for students. Be careful with that option as it may not have the same favorable terms as other types of student loans. Even better news is once you have one, there are ways for you to save money on your student loan.

Tips For Saving Money Before Selecting A Loan

There are different ways to save money on your student loan but it is important to think about these items before you select your loan. This may sound like an obvious statement, but it has value, so I am going to say it. Borrowing less money will save the amount of money you owe for your student loans. You should keep in mind that there is interest on top of the actual amount of money you borrow. That interest increases the amount of money you have to repay. When you are determining how much money you need, you may forget that you have to pay it back at some point. You can find a job and make some money to pay for your college expenses so you do not have to borrow as much money.

Another way to borrow less money is to begin saving money ahead of when you need it. If you are going to school right now, it may be too late for you to save in advance. However, if you know you are not going to school for another few years, start saving money now. Save as much money as you can so that is less you need to borrow. You will be surprised at how much money you can save yourself in the long run.

What Are Some Types of Student Loans?

Before you can think about ways to save money on your student loan, you first must understand the details of a student loan. When you begin student loan shopping, you will find there are many different options available to you. A student loan is when you borrow money to pay for school and you make a promise to repay. The loans are for tuition, room and board, and books. Some student loans are for specific items. You may find a loan only to realize that it is for tuition only and you cannot use it for anything else.

Traditional Student Loans

With a traditional student loan, you can borrow money from a traditional bank or through a federally funded program. When you repay the loan, you are also paying interest on top of the money that you borrow. Loans come from different sources and each one may have unique benefits. Usually, the interest rate of a student loan is a fixed rate and often lower than other interest rates. You may not need a credit check to be approved for your student loan. Carefully consider all of your options when you are making decisions about student loans. They may have long term impacts on you and your credit score. Normally you do not have to repay the student loans until you graduate from college or reduce your status to part-time. Most loans have flexible repayment plans and are easy to finance or postpone.

Income Share Agreement

An income share agreement is much different from a student loan. An income share agreement is something you typically set up with the school in which you plan to enroll. However, there are other institutions that will set up an income share agreement with you. With this agreement, you are promising to pay back the money for tuition after you have graduated and have a job. You pay back the loan for your tuition with a percentage of your future wages. When you and the school agree to the terms of your loan, you are both projecting how much money you will make after graduating. You are making the assumption that you are able to find a job and will earn a certain salary. Even if you do not have a job, you are expected to repay this loan.

Getting a student loan from a credible lender is extremely important. You don’t want to get scammed. Loanry is here to help you make sure you’re on the right path.

A Cosigner could help you with a private loan

You can consider having a cosigner, such as a parent, and get a private loan. Even if you are able to get a loan without a cosigner, you might want to consider one because it could help you get a lower interest rate. You may not know this but when two credit scores are used for a loan, lenders look at the higher credit score and base the interest rate off of the higher one. This can help you obtain lower rates. It is also possible that you might be able to get a discount because you have a cosigner. You should remember that anyone that cosigns for a loan for you is also responsible for the debt. That means that the person is on the hook for paying the loan, too. If you default on the loan, then your cosigner is financially responsible.

Stay Away From Capitalized Interest

Do you know what interest capitalization is?

How to save money on your student loan - Example of capitalized interestIf you do not, you should. This is another way that you can save money on your student loan. When you take on student loans, you do not pay them until some date in the future. During that time you are not making payments, the interest may accrue. If it accrues, then it is capitalized by being added to the balance of your loan. This means that you will owe more money when it comes time to make payments.

This process can increase the cost of your loan by about 20 percent by the time you have graduated. If you have a loan that accrues interest as soon as you sign the paperwork, you should pay the interest as it is accruing. Doing this helps you can keep your loan amount from growing. Depending on your type of loan, it may capitalize on a monthly basis, which for you means the amount of the loan grows faster and a greater amount. Federal loans do not begin to capitalize until you start the repayment portion of your loan.

Can I Use My Student Loans As A Tax Deduction?

Yes, you can use the interest that you accrue on your student loans as a tax deduction. Keep in mind this will not save money on your student loan. However, it can help you with the amount of money that the IRS considers income when you file your taxes. You cannot use your entire loan amount as a tax deduction, but you are able to deduct up to $2,500 in interest. It does not matter if you have a private loan or a federal loan, you can still deduct the interest from your taxes. The great thing about a deduction of student loan interest is it is considered an above the line deduction so you will not have to itemize all of your deductions to claim it.

Can I Prepay My Student Loans?

One of the great things about a student loan is that they do not have prepayment penalties. Neither private not federal loans penalize you for paying your loan early. Some lenders charge you if you pay off your loan earlier than the timeframe they have given. There is no such penalty for student loans. The federal government actually has a law in place that prevents lenders from charging you for paying off your student loans early. This gives you free range to make as many payments on your loan as you would like. One of the ways to save money on your student loan is to make more than one payment per month.

Even if you can make a second payment in the full amount, any amount you can pay helps reduce your student loan balance faster. This helps you save money because you are reducing the amount of interest you have to pay on the loan. The interest accrues over the time you take to repay the loan, so the less time you take to pay the loan, the less money you pay in the long run. Paying more money each month can actually save you thousands of dollars in interest. Making the sacrifice to pay the extra money is worth it because it saves you in the long run. Even making an extra payment every two months can help accelerate the time it takes you to pay the loan.

Can I Consolidate My Student Loans?

You can also save money on your student loan by consolidating your loans. This allows you to combine all of your loans and debts into one payment, with hopefully a lower interest rate. This allows you to get your debt under control when you graduate and at the beginning of you needing to repay your loans. One thing to consider when you are considering consolidating your loans, it may have a negative impact on your credit score. You are taking on a new loan, which adds to your debt and that may cause your credit score to go down. There is a period of time when you consolidating your debt when you take on the new loan but the old loans are not paid off, which increases your debt substantially. Once the old debt is paid, the amount of debt you have goes down and your credit score may increase.

What Is Student Loan Forgiveness?

Another way you can save money on your student loan is to see if you can have your loans forgiven. A word of caution when it comes to loan forgiveness is that some programs are called loan forgiveness but are just consolidation programs. When a program claims to be a loan forgiveness program, it comes from the federal government. Any program from anywhere else is not a true loan forgiveness program. They are not easy programs for which to be approved.

You can only qualify for many of these programs after you have made payments on them for a certain number of years. Those payments must be timely and for the correct amount. There are also some specific degree programs that qualify for loan forgiveness. Public service, teachers, and doctors typically qualify for loan forgiveness. If you are in a public service field, you have to make payments for about 10 years before you can get forgiveness, but at that point you can qualify for 100 percent forgiveness. Teachers working for a qualifying school for at least five years and then you can qualify for loan forgiveness for anywhere from $5,000 to $17,500 in student loans.

What Student Loan Forgiveness Options are Available?

How Do I Qualify For Forgiveness?

If you can qualify for loan forgiveness, you can potentially save money on your student loan. There are websites that provide information on student forgiveness and potential repayment plans. These websites allow you to fill out some information that gives you an idea of what type of forgiveness you may be able to receive. You can also determine the balance of your student loans and gives you the ability to have some control over your payments.

You may not qualify for forgiveness for your student loans. But you may be able to qualify for a lower repayment plan. And you may be able to get an incomes based repayment which is based on your income level. You may be able to qualify for a payment that is based on your earnings. When you earn more money, your payment amount goes up. When you are making a lower income when you first start employment, you can have a lower payment amount. It is possible that you might be able to qualify for a minimum monthly payment of $0. You do have to apply for this once a year to re-certify the repayment plan that you have. It is something that is reviewed on a yearly basis.

Can I Get A Lower Rate For My Student Loans?

There are a few ways you can save money on your student loan by getting a lower interest rate. One way to get a lower interest rate is to refinance your student loans. When you refinance your loans, you are getting a new loan at a better interest rate. The new lender pays off the debt to the old lender and then you repay the new lender each month. By getting a lower interest rate, you can reduce your monthly payment amount. If you get a lower payment amount, you can still continue to pay the old higher amount to pay off the loans faster.

Another way to get a lower monthly amount on your student loan is to have your payments automatically deducted. Many private lenders and federal loans offer a discount when you allow them to deduct your payment directly from your checking account. You could get a reduction of as much as .25 percent from your student loans when you allow the lender to take the money directly from your account. This allows the lender to take the money on the day it is due instead of waiting for you to mail them a check. There is no doubt that you are going to pay the lender because they are automatically taking the money from your account.


This article provides you a large amount of information about how to save money on your student loan. You should have all the information about student loans before you make a final decision on how to move forward. There are many options available to you and you may have to choose more than one option to be able to have enough money to pay for college. Student loans have long repayment periods, so you will be paying the loans for a long time after graduation.

As a result, you should make sure that you fully understand what you are agreeing to when you take on a loan. Once you have the loan and you have finished school, it is time to starting making those payments. There are many ways to save money on your student loan. You should be aware of them. That way, when the time is right, you can make the best decision for you. That decision may be different over time, so you should know what options are available as you go through the repayment process.