Saving Money on Student Loans

As the beginning of a new school year approaches, many people may be facing a huge expense – student loans! They can be an absolute headache, but unfortunately they are a fact of life for mostly everyone who attends college. The fun of student loans began for me two years ago when I finished my undergraduate education at UMass Lowell. While I was more excited than ever after finishing school, the feeling faded quickly when I opened the dreaded envelope that had my first student loan bill inside.

Don’t get me wrong, I’m glad I went to college and there are far worse things in life than paying student loans! However, I think I could have made it easier on myself, and have some advice to offer people who are going through the process of getting loans and heading off to college now.

I consider myself lucky that I’m not in over my head with my monthly payments, but I could be in better shape had I been a little more proactive. I truly wish that I thought about student loans more when I was still in school. I remember my mom suggesting that I start making interest-only payments while I was still in school. That advice seemed to go in one ear and out the other. (Sorry, Mom! I should have listened to you!) The payments would have been pretty small, but I just did not want to spend my money in such a “boring” way. Someone might say I had a lot less self-discipline back then when it came to money, and you are right. You live and you learn, then you blog about it.

I also would have tried to pay more out of pocket, and take out a smaller loan. If I did this, I would be seeing a much smaller amount of interest on my bill that comes every month. I had two part-time jobs, very few bills, and lived at home, so I had plenty of cash to save or spend. I know there are things I spent money on back then that I definitely didn’t need and now I regret it. Even if I had taken out $5,000 less than what I did, I would be saving so much money now!

Now that I am paying my loans monthly, I want to get them paid off as fast as possible. Once the loans are paid off, it will free up more money for me to buy a house. Lately, I have been making a larger payment than what is due. If I have extra money, I know it’s smarter to spend it this way instead of on getting the newest iPhone, going to one more concert, or buying another pair of sneakers. Also, the money sitting in your bank account is probably not making as much interest as the interest that is growing on your student loans. If you have the opportunity and cash to do this, I strongly suggest it. You could be reducing your pay-off time by years, depending on how much extra you pay every month. It isn’t always fun to pay that much money at once, but in the end, it’s worth it!

I wish there was a way to avoid student loans altogether, but unfortunately it just isn’t the case for most people. Take my advice, and learn from my mistakes! Trying these three tips can put you in a good spot in the future and will make paying off your student loans much less painful.

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