Student Loans : News, Updates and Blog Posts

A lot of the blogs on Student Loan Network focus on how to get a loan or the benefits of each. Today, I’d like to take a different perspective and provide some helpful information for students who already have them; specifically, what you can do to minimize your student loan debt and take full advantage of your loan benefits.

1. Keep an eye on rewards and incentives.

Did you know that the vast majority of private lenders offer repayment incentives such as interest rate reductions? In many cases, these reductions come from automating payments through a checking or savings account (ACH). 0.25% is the common amount.

In addition, cosigner release is becoming more and more available. This allows you to free a cosigner of their financial burden after you’ve successfully completed a certain number of on-time payments. If your loan offers this, I’d recommend marking the last payment month on your calendar so you don’t forget to call and take advantage of this benefit.

2. Make Prinicipal-only Overpayments

Not everyone has the resources to do this, but paying over your minimum can cut years off of your private student loan repayment. Here’s an example (I used piti.us for my calculator):

Loan Amount: $10,000
Repayment Term: 15 years or 180 months
Interest Rate: 6.0%
Monthly Payment: $84.39

So if you were to pay $20 more each month and apply the payments directly to principal, you’d be done in 10.9 years and save $1,544 or about 10%.

If you pay $40 more per month, you’d finish in 9.4 years and save $2,367.53, or 18.5%. Also, the higher your interest rate, the greater the savings.

3. Use auto-bill pay or set a calendar reminder to pay your loans.

Even if you don’t get an interest rate reduction for auto-debit, it still is the best way to make sure your loans always get paid on time. The easiest way to rack up a ton of debt (and screw up your credit) in repayment is to miss a loan and get slammed with a late fee or go into default.

At the bare minimum, go into your favorite calendar app and make a recurring reminder for your 2-3 days before the payment is due each month. If you’re the forgetful sort, make it a week before.

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Do you have a good private student loan tip? Post it in the comments!

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