Generally, the payment period on your student loans doesn’t start until six months after graduation. But that doesn’t mean you can’t start paying them off while you’re still in school. In fact, that’s exactly how I paid off $90,000 in student loans within roughly two years of graduating from an MBA program.
Paying off your student loans early is a great feeling, and it comes with significant financial benefits. Keep reading to find out how you can benefit from paying off your loans early, and how to easily start making student loan payments while still in school.
Build a budget
Students’ budgets are often small, which is why students with any sort of income have a huge advantage over others when it comes to making payments on student loans while still in school. If you can set aside money each month to start paying off your student loans, you’ll graduate in better shape than many of your peers.
If you haven’t created a budget, start now and develop good financial habits early. Check out budgeting apps to track where your money goes and try to save a few extra bucks each month for loan payments. Some apps are free, like Mint, or available through a paid subscription, like You Need a Budget.
Get a side gig
If your budget is too tight to make any student loan payments even after trimming expenses, then it might be time to consider increasing your income. You can earn extra cash on the side by getting a remote part-time job, an in-person side hustle or a paid internship.
Even if you can’t commit to a part-time job, you may still be able to find work as a tutor or researcher on campus that fits in with your class schedule.
Pay off high-interest student loans first
Look at your student loans and find out which ones are accruing interest while you’re still in school. Then, pick the loan with the highest interest rate and focus on paying that one down first, known as the debt avalanche method of debt repayment. Even if all you can afford is $10 to $20 a month, making small payments limits the amount that interest can compound over time.
When I was working on my MBA, I had two large subsidized loans that weren’t accruing interest and two larger unsubsidized loans that were. Since I didn’t want my unsubsidized loan balances going up too much during school, I set up automatic monthly payments to cover the interest, plus an extra $5 for good measure.
In school, I had a full-time job and lived on a shoestring budget. This helped me get the income I needed to put extra money towards my loans. I focused all extra payments on the smaller of my two unsubsidized loans so the balance would start to fall while I was still in school.
Set up online payments
During my MBA program, I set up automatic payments for two loans and made additional payments each time I got paid, all on my student loan servicer’s website.
A student loan servicer is a company that manages your loans, and the company you send monthly payments to. Log into the servicer’s website to see your loan details. You’ll learn how much interest you’ve been accruing each month, how to set up automatic payments and how to make one-time payments.
Automatic payments or autopay will make your student loans much easier to manage, and will likely qualify you for an interest rate discount, too. If your income is sporadic, you can make payments manually — but be sure to set calendar reminders so you never miss one.
Develop healthy habits early
If you can start making regular student loan payments while still in school, you’ll be more prepared to continue repaying your loans after graduation. Even if you’re only able to pay a few dollars each month, you’ll get a head start and build healthy financial habits that will help you down the road.
Larissa Runkle contributed to this report.