Nearly all student loans have options to defer payments while
attending college; however, making payments on your student loans while still
in school can save you thousands of dollars just by the time you graduate.
Here’s what you need to know about making payments on student loans while still
in college and some student loan interest calculators that can help.
Subsidized
vs. Unsubsidized
Subsidized student loans are federal
loans that the government pays the interest on while the student is still
attending college. These loans are granted to students who meet certain
financial qualifications. On the other hand unsubsidized student loan and
private student loans accrue interest while the student is in school.
Compounding
Interest
Although students are not required to
pay on their student loans while in college, interest on those loans still
accrues, which means that each month interest is owed on your loan is added to
your principal balance. The interest due is compounded onto the loan quarterly.
So every three months the outstanding interest balance is added onto the
principal balance.
With your interest rates compounding it can make your loan balance
balloon. After graduating your loan will be thousands more than the initial
balance and you will end up paying much more for your loan. Paying the interest
while attending school will help you to avoid this situation.
Another benefit is that interest paid on student loans is tax
deductible. Each year when you file your taxes you can write-off up to $2500
worth of student loan interest payments.
Student
Loan Interest Calculators
There are calculators available on the Internet that will show you how
much money you will save by paying on your interest while attending school.
Here are a couple of calculators to look at:
Interest Savings Calculator
- With
the interest savings calculator by You Can Deal With It,
you can enter up to 8 different loans.
- It
compares the interest you will pay on the loan if you do or don’t make payments
while attending school.
- It
shows you the total amount of money you could save and how much your
monthly payment could be reduced.
Student Loan Deferment Calculator
- Deferment
Calculator by Fin Aid to input all of your
original loan details: original principal balance, payment, interest rate,
loan term and how frequently the interest compounds.
- It
then calculates how much interest will be charged on the loan during the
time of deferment.
- It
shows you what your new balance will be when you enter into
repayment. Also the difference in interest if you made payments
while in school.
What
should I do?
Speak with your student loan provider, private or federal, about how
much interest is charged on your loan monthly. Some private lenders actually
offer lower interest rates to borrowers who intend to pay while in school. This
is a very favourable option as you can save on your actual interest rate and
total repayment.
If you can, saving on education loan
interest calculator and being proactive about how much
you could save by paying while in school is always a good idea. Look into your
financial situation; what you can afford, use a student loan interest
calculator and make decisions that can help reduce your total debt.
Source:https://www.credible.com/blog/student-lending/why-you-should-use-a-student-loan-interest-calculator-while-in-school/
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