Buzz
Student loans may not be on your radar as you juggle classes, rushing a sorority, and figuring out that guy down the hall, but there are a few crucial steps you can take now to get ahead financially before graduation.
It’s Freshman Orientation Week at Mytour! This week, we’re sharing tips to help you shake off your summer mindset and dive into a productive autumn, whether you're heading to campus for the first time, preparing your kids for school, or simply looking to be more efficient in the classroom of life. So grab your Trapper Keepers, students. Class is officially in session.
Consider Making Interest-Only Payments While You're Still in School
If you have federal loans, you usually get a six-month grace period after graduation before you need to start repaying them. The idea is that it will take you this time to secure a job and settle into your new life. However, if you begin making payments while still in school, you could save a substantial amount in the long run.
This is particularly important for unsubsidized loans, which start accruing interest while you're still in school. The interest on these loans is capitalized, meaning it gets added to your total loan balance. The following month, you'll be paying interest on this larger amount, and the cycle continues to grow.
If you can, try to make interest payments while you're in school. You can set up automatic payments through your student loan servicer's website (check your loan statement to find out who your servicer is—it will likely be a company like Great Lakes, MOHELA, Navient, or Nelnet) to cover at least the interest, preventing your balance from increasing while you're still studying.
You’ll Need to Complete FAFSA Again Next Year
Most financial aid offices require you to submit FAFSA annually, so set a reminder to review it in the spring. You don’t want to miss out on any potential financial aid.
Don’t Rely on Loan Forgiveness
A lot more people hope their loans will eventually be forgiven than is realistically probable. If you’re banking on Public Service Loan Forgiveness, be aware that the criteria are very strict. Other forgiveness options may take decades. And if you go the forgiveness route, expect a potentially hefty tax bill at the end.
The more likely scenario is that you’ll end up paying off your entire debt. So, it’s crucial to research your repayment options, set a practical budget, and have a strategy that fits your needs.
Understand the distinction: Forgiveness only applies to federal loans. If you have private loans (or you consolidate federal loans with a private lender later), forgiveness won’t be an option.
Don’t Simply Follow Mom and Dad’s Advice Blindly
Mom and Dad might have helped you complete your FAFSA and loan paperwork this year, but that doesn’t mean you should automatically follow their advice without doing your own research.
Your parents are intelligent and well-meaning, but that doesn’t mean they fully understand the complexities of student loans, especially since even the so-called “experts” can get confused. (In fact, your school may not even give you the most accurate loan advice.) Make sure to do your own research.
Be Cautious of Scams
Student loans are worth billions, making them a prime target for scammers. Some will claim to help you pay off your loans faster, while others may offer questionable refinancing options. Stay away from them.
Above all, never share your Federal Student Aid ID with anyone. Scammers can access all of your personal details with it, which could cost you far more than your student loan payments ever would.
