paying student loans while in college
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The student loan crisis has never been worse.

The total outstanding debt has now reached an all-time high of $1.4 trillion, collectively held by over 44 million borrowers.

Though many borrowers struggle with repayment (11.5 percent of recent graduates are in default), there are steps you can take while in college to make sure that you are not one of them.

Of course, you should be responsible for your student loan money and only borrow what you truly need. You could also get a part-time job to help make some extra money so you can take on less debt in the first place. These are the obvious ways to save.

There is, however, one trick that most students never even think about…

Paying Student Loans While in College

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The single best move you can make to save on your student loans while you are in college is to make payments on your loans – even though you may not be required to. You will save money on interest and will have less debt to deal with once you walk across the stage to receive your diploma.

I’ll go through some simple strategies based on the type of loan you have.

If You Have Unsubsidized Federal Student Loans and/or Private Student Loans

Unless you are lucky enough to have subsidized federal students, in which the government pays the accrued interest while you are in school, your loans will accumulate interest the whole time you are taking classes.

This is the case for unsubsidized federal student loans and private student loans.

If you don’t make any payments while in college, you will already owe thousands of more dollars than you took out in the first place once you graduate.

One smart move is to pay at least the accrued interest on your student loans while you’re in school (if you can). This will keep your principal balance level, and when you graduate, you will only owe what you originally borrowed.

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If you don’t pay the accrued interest, your principal balance will continually grow, and each subsequent interest charge will be more due to your higher principal balance.

If you can pay more than just the interest while in college, you definitely should. The sooner you start paying down your debt, the less your monthly payment will be once you are required to make payments and the more you will save in interest in the long-run.

If You Have Subsidized Federal Student Loans

If you do have subsidized federal student loans, you can still make payments towards your principal balance while you are in college.

Similarly to making more than the accrued interest payments on unsubsidized and private loans, making payments on subsidized loans will save you money in interest in the long-run.

Think of it this way…

The government is already making the interest payments for you. Your loan balance is hanging out at the level of the loan amounts you originally took out.

If you have some extra cash, why not put it towards your loans?

You’ll start paying down your principal balance and when you are finally charged interest, it’ll be on a balance much lower than you originally took out.

As a result, once your grace period is over, you will have lower required monthly payments and a lower total loan cost. In addition, it will be much easier to pay off your loans faster if you wish.

Paying Student Loans While in College Pays Off

While it may be hard to think about your financial future in college while your peers are blowing money on beer and expensive restaurants, it is well worth it.

The average student loan borrower is stuck with his or her debt for 10+ years and will end up paying tens of thousands of dollars in interest.

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By making a few small contributions a month, or even when you can, you can help ease the burden you will inevitably feel once you are required to start paying off your loans.

Make a small sacrifice now to help yourself out in a big way in the future.

Have you considered paying student loans while in college? Leave a comment below if you have any questions!

Joe Stacker

Joe is a new personal finance blogger over at Paper Stackers. When he’s not working, you can find him doing fantasy football research, reading a good book, or playing lacrosse.

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Are You Eligible to Refinance Your Student Loans?

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