At ValoreBooks, we want to help you save money on all the costs of college — not just textbooks. That’s why we’re here to drop some money-saving knowledge about student loans. While borrowing for college may seem like one of the great mysteries of life, saving money on your student loans is surprisingly easy:
It may seem obvious, but the truth is that many students borrow more than they need. This happens when students don’t budget or borrow for extracurricular expenses like traveling home over break, a new computer they don’t need, or pocket money. But remember that all borrowed money must be paid back with interest—meaning the more you borrow, the more you pay over time. Budgeting makes it easier to avoid over-borrowing. Start by calculating exactly how much you’re going to spend each semester. Incorporate your savings and your earnings into that budget. Then only borrow what you need to make up the difference.
Not all student loans are created equal. For example, federal student loans usually have lower interest rates and more favorable borrower benefits than private alternatives. When you take out federal student loans, you may also qualify for student loan forgiveness after you graduate. Don’t think you qualify for federal student loans? Think again! Most students qualify for unsubsidized Stafford loans, regardless of their parents’ income. Students with low family incomes may even qualify for the cheaper subsidized Stafford loans, saving them even more money. It’s best to consider private student loans a last resort—after you’ve reached the federal borrowing limit, for example.
Compare your private student loan options
If you do need to borrow privately, remember to compare your options first. SimpleTuition makes it easy (and free!) to find private student loans and compare them by total cost, monthly payment, number of payments, and APR, or annual percentage rate. You can also learn about fees and borrower benefits, which could have a big impact on your total cost. In other words, planning ahead, knowing what’s out there, and making the right choice for you can save you money.
Plan for repayment
Many students don’t think about student loan repayment until after they graduate, only to discover they don’t know how much they owe, or what their monthly payment will be, or if they have enough income to pay for it. Planning ahead can save you the stress (and cost!) of missing payments. At the very least, keep a record of how much you’re borrowing each semester so you’re not surprised at the end of your education.