If you are a current student or someone planning to attend college soon, you can pay off your student loans while you’re in school by making additional payments.
Before you make any extra payments, establish your budget and contact your loan servicer to determine how to direct your payments.
When Are Student Loan Payments Due?
The due date for your first payment depends on your loan type and the terms you agreed to when you signed your loan agreement. Your loans may have a grace period that postpones loan payments while you’re in school and for a short time after you graduate.
Federal Student Loans
With federal student loans, payments aren’t required while you’re in school, but interest may accrue, depending on your loan type:
- Direct subsidized. Direct subsidized loans don’t accrue interest while you’re in school and during the six month grace period after you graduate. .
- Direct unsubsidized. With Direct unsubsidized loans, there is a six-month grace period after you graduate when you won’t have to make payments. However, interest accrues while you’re in school and during that grace period.
- Grad or Parent PLUS. Grad and Parent PLUS loans don’t have grace periods, but borrowers can defer principal and interest payments until six months after leaving school.
Private Student Loans
Private student loan lenders can offer deferment periods for loans. When you take out the loan, you can pick a repayment plan that affects in-school payments, depending on your lender. Lenders usually offer the following repayment options:
- Immediate repayment. Under immediate repayment plans, you make loan payments on the principal and interest right after the loan’s disbursement date. This option gives you the highest in-school payment amount and the lowest overall repayment cost.
- Interest-only repayment. With interest-only repayment, you make monthly payments on the accrued interest while you’re in school and during any grace period. After that, your payments increase to cover both the interest and principal. This repayment plan can lower overall repayment costs versus partial or deferred repayment since you’re covering the interest charges.
- Partial repayment. This option requires you to pay a fixed amount while you’re in school and during the grace period. This payment plan can help reduce the amount of interest that accrues.
- Deferred repayment. Some lenders allow you to postpone your payments until six months after you graduate or leave school. During your time in college, you don’t have to make any payments, but interest accrues and causes your loan balance to grow.
Can You Pay Student Loans While in School?
If you’re willing and able to make extra payments, you can pay off your student loans while attending school. Federal law allows you to make extra payments on both federal and private student loans without penalty, allowing you to eliminate your debt faster.
Payment Example
Making payments while you’re still in college can make a big difference over time. Consider these examples, which assume you took out a $10,000 loan at 5% interest wit a 10-year repayment term:
The payments in these examples are the minimum required under each repayment plan. You can reduce interest charges and quickly eliminate your debt by paying more than the minimum required.
For example, here’s how much you could save by adding to your monthly payment under an immediate repayment plan:
How To Repay Your Loan Before You Graduate
Making loan payments in school can save you money and cut down on interest charges. These steps can help you make payments before graduation:
1. Create a Budget
As a college student, there are a lot of demands on your money. Create a budget to determine how much cash you have left over after covering your other expenses. The excess is what you can dedicate to your loan repayment while you’re in school.
2. Identify Your Loan Servicer
Your loan servicer is the company that handles payments and answers any questions you may have, and it may be different from the lender that issued the loan.
For federal student loans, you can find your loan servicer by visiting your Federal Student Aid (FSA) dashboard and logging in with your FSA ID. You can also call the Federal Student Aid Information Center at 1-800-433-3243.
If you have a private education loan, you can find your loan servicer by reviewing your credit report.
3. Contact the Loan Servicer
Once you know who your servicer is, reach out to them by phone or set up an online account to make your payments. If your loans aren’t in repayment, let them know you want to make payments outside of your current payment schedule.
4. Decide How Much To Pay
Some lenders have payment minimums but there’s generally no limit on how much you pay toward your debt, so you can choose an amount that works for your budget. You can make either a one-time payment toward your debt or set up recurring payments so the money is automatically withdrawn from your bank account.
5. Determine How You Will Apply Your Extra Payments
The government has rules on how loan servicers handle student loan payments. First, loan servicers have to apply payments to the outstanding interest. Any remaining funds are applied to the principal balance.
By default, lenders apply excess payments to accrued interest and then the principal of the loan with the highest interest rate. If you’re in school or in your grace period, the loan servicer applies it to the outstanding interest on all of your loans, then to the principal of the unsubsidized loan with the highest interest rate.
However, you can change how the loan servicer handles excess payments by defining your payment preference. For example, if you’re following the debt snowball method and want to pay off the loan with the lowest balance first, you can ask the servicer to apply the payment to a specific loan’s principal.
Many loan servicers allow you to specify your preferences for excess payments online, but with some, you may need to contact customer support or mail in a written request; otherwise, the loan servicer will follow its default process. Proactively reaching out ensures your payments go where you intend.
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