Student loans have a variety of repayment plans. Many student borrowers opt to utilize the grace period—a six month period after graduation where they don’t have to make monthly payments on their student loan debt. However, there is an option to start repaying the student loan back as soon as you take it out. But is that the best option for you?
Benefits of Repaying Loans Early
There are two major benefits to starting your loan repayments ASAP. 1) You pay off the loan sooner and 2) You end up paying less by way of accruing interest. This gives you a head start on paying off your loan and focusing on other things instead.
The Financial Balance
Of course, you took the loan out to pay for tuition in the first place because you didn’t have enough money to cover the cost in full. In order to start repaying the loans, you have to have a source of stable income, which typically means having a part-time job while in school. Many students do this, but it can be tricky balancing the time between work and study. Additionally, there are other costs to manage—like general college fees, food, clothes, and other spending habits. Making loan payments on top of all that is a challenge, but one that can be well worth the effort.
So Should I Start Repayments in School?
This question is entirely dependent on your personal situation. A student with good grades, a steady paycheck, and who’s on track for graduation might find that repaying early is extremely beneficial. But a student with an overloaded schedule and tough classes may find that the grace period is just what they need to get their feet under them.