How to Stay on Top of Your Student Loans While Still in School

By Alicia Geigel on January 22, 2024

This article is brought to you by GradGuard. We protect college students and their families from the financial risks of college life, like providing a refund for tuition or replacing a stolen backpack when your school may not. When the unexpected happens, GradGuard’s tuition insurance and renters insurance can help you get back on track.

Funding a college education is neither easy nor cheap. In the United States, over 85% of students get some form of student aid in college, whether it’s in the form of a grant, scholarships, or student loans. Student loans are the most common way that students pay for their college education, but paying these loans back after graduation can be difficult with high monthly payments and accrued interest.

Staying on top of your student loans while you’re in school can sound daunting, but when done right, you can save money on the total balance of your student loans in the long run. While there are a few different ways to do this, the best way to do this is by making payments towards your loans while you’re still in college.

If you’re curious about the best way to do this, keep reading for the best tips!

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What Are the Benefits of Paying Student Loans in School?

a. You Can Lower Your Loan Balance Over Time

b. You Can Build Your Credit

c. You Can Establish Good Financial Habits

How to Stay On Top of Student Loans in School

1. Make a Monthly Budget to Keep Track of Costs: Get a binder or notebook, or use a Word Doc on your computer to create a list of everything you spend and what needs to be paid each month, along with your monthly income. Include anything that you pay for like tuition, room & board (if you live in a dorm) rent (if you live in an apartment), a phone bill, a car payment, insurance payment, gas, groceries, electric, water, etc. In addition to the necessary costs that you pay each month, factor in a number that you are comfortable with paying toward your loans. Having a budget will help you know exactly what you can and cannot afford to pay toward your loans.

2. Create a High-Yield Savings Account: A high-yield savings account can help you make money on top of what you’re saving in your account. These types of accounts can include money market accounts and CDs, which have higher interest rates and require no extra effort on your end. To help add some extra money to your pocket, which you can put towards your loan payments, create a high-yield savings account. Most have over 4% APY (annual percentage yield), and can really help you grow your savings over time. If possible, try to add money to the account each month, whether it’s $5, $10, $20, $50, etc., and use these earnings to put toward loan payments in school.

3. Establish an Account With Your Loan Servicers: After you set a budget and create a high-yield savings account, set up an account with your loan servicer or servicers. If you took out federal student loans, your loans have likely been transferred to another loan servicer, such as Navient or NelNet. When you create an account with your email and contact information, your loan details should be available for you to view and make payments toward. Getting this step out of the way will make the process easier, and you can even set up email and phone notifications to stay up to date on your loan!

4. Pay Unsubsidized Loans First: When you take out student loans, there is a chance that you have both subsidized and unsubsidized. According to The U.S. Department of Education, subsidized and unsubsidized loans are both federal student loans and offer a six-month grace period before you’re required to start repayment, but differ in terms of interest. While subsidized loans don’t start accruing interest until after the six-month grace period, unsubsidized loans begin accruing interest when the loans are dispersed. If possible, it is a smart choice to pay toward your unsubsidized loans first as any payments you make will go directly toward your interest, and save you money in the future!

5. Cut Back on Spending: In a perfect world, we could all cut down on eating out, eliminate the cost of renting, and have a perfect bundle of cash saved for buying a home. As we don’t live in this utopia, there isn’t a one-size-fits-all approach to budgeting. A smart budgeting plan is unique to each person’s living and financial situation. Some ways to budget include: comparing car insurance rates, negotiating service bills (i.e. cable, cellphone, or internet bills), canceling unused subscriptions, buying generic goods over brand-name products, and couponing when you shop.

When you’re in school, the last thing that you want to do is worry about is paying your student loans. Though it may feel better to push off loan payments until after graduation, it will definitely help cut down on the total balance of your loans by lowering the accrued interest in the future. By setting up a budget, creating a savings account, and cutting back on spending, you can have control over your finances and put money back in your pocket!

It’s no secret that college costs a lot of money. Make sure your investment in higher education is protected with GradGuard. Our affordable tuition insurance and renters insurance plans are specifically designed for college students. Customizable plans make it easy to protect your tuition, room and board, laptop, bike, and so much more.

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