Save on Student Loans

Welcome to the student loan module of our course! You’ve already taken significant steps by creating a budget and compiling your loan information.

Now, let’s dive into the unique world of student loans and uncover opportunities for savings that you might not have considered.

Why Student Loans Are Different

While you’ve tackled debt in general, student loans come with their own set of rules and opportunities:

Flexible Repayment Options: Unlike most other debts, federal student loans offer a variety of repayment plans that can adjust based on your income and family size.
Forgiveness Programs: Certain careers or payment plans can lead to partial or complete loan forgiveness – a benefit rarely seen with other types of debt.
Special Deferment and Forbearance Options: Student loans often have more generous terms for temporarily pausing payments during financial hardships.
Unique Tax Benefits: Interest paid on student loans can be tax-deductible, even if you don’t itemize deductions.
Impact on Credit Scores: Student loans are often treated differently by credit scoring models, potentially having a more positive impact on your credit score compared to other types of installment loans.

Diving Deeper: Understanding Your Loan Types

You’ve already listed your loans, but now it’s time to categorize them. This categorization is crucial because different loan types have different benefits and repayment options.

Action Step: Categorize Your Loans

Follow these steps to categorize your student loans:

Step 1

Log into Federal Student Aid

Visit studentaid.gov and log into your account.

Step 2

Identify Federal Loan Details

For each of your federal loans, identify:

Loan Program (e.g., Direct Subsidized, Direct Unsubsidized, PLUS, Perkins)
Loan Servicer
Interest Rate Type (fixed or variable)

Step 3

Note Private Loan Information

For any private loans, note:

Lender
Interest Rate Type
Any special features (e.g., co-signer, unemployment protection)

Why This Matters

Loan Type Characteristics

Direct Subsidized Loans: The government pays interest during deferment periods.
Direct Unsubsidized Loans: Interest accrues at all times, even during school.
PLUS Loans: Have different repayment plan eligibility and interest rates.
Perkins Loans: May be eligible for unique cancellation programs.
Private Loans: Typically have fewer protections but may offer competitive rates.

Unveiling Hidden Opportunities

Now that you’ve categorized your loans, let’s explore some often-overlooked aspects:

Subsidized vs. Unsubsidized: If you’re considering deferment or forbearance, prioritize this for unsubsidized loans to minimize interest accrual.
FFEL Program Loans: If you have these older federal loans, consolidating them into a Direct Consolidation Loan could open up more repayment and forgiveness options.
Perkins Loans: Check if your career qualifies for Perkins Loan cancellation – up to 100% can be forgiven for certain public service jobs.
Grace Periods: If you’re a recent graduate, note that grace periods differ between loan types. Unsubsidized loans accrue interest during this time, while subsidized loans do not.
Income-Driven Repayment (IDR) Plan Eligibility: Not all federal loans are eligible for all IDR plans. Your loan mix will determine your options.

Your Next Steps

Action Items

Categorize your loans as described above.
Identify any Perkins or FFEL Program loans that might benefit from special programs or consolidation.
If you have a mix of subsidized and unsubsidized loans, create a strategy that prioritizes the unsubsidized loans for faster repayment.
Check if you’re in a grace period for any loans and note when it ends.

Key Takeaway

Armed with this deeper understanding of your student loans, you’re now ready to explore the specialized repayment strategies and savings opportunities we’ll cover in the next sections. Remember, when it comes to student loans, knowledge truly is power – and savings!

By understanding the nuances of your student loans, you can make informed decisions about repayment strategies and potentially save thousands of dollars over the life of your loans.

In our next section, we’ll look into advanced repayment techniques and loan forgiveness programs!