Three Tips to Get the Most Out of Your Private Student Loan | 08.19.11

Posted in Private Student Loans, Repayment By Student Loan Network Staff

Compare Private Student LoansWhile there are a lot of resources out there helping students to find the best private loans, I’m hoping to take it a step further and discuss some of the best repayment tips and tricks private loan holders may not be aware of. There are a lot of ways students can not only manage their debt, but even reduce it!

1. Keep an eye on rewards and incentives

Did you know that the vast majority of private lenders offer repayment incentives such as interest rate reductions? In many cases, these reductions come from automating payments through a checking or savings account (ACH). The incentives can range from about .25% to .50% and can save you a lot of interest. 

Cosigner release is another common benefit of many private loans. This allows you to free a cosigner of their financial burden after you’ve successfully completed a certain number of on-time payments. If your loan offers this, I’d recommend marking the last payment month on your calendar so you don’t forget to call your lender to take advantage of this benefit.

2. Make Prinicipal-only Overpayments

Yes, overpayments. While I realize that not everyone has the resources to do this, for those who can, paying over your minimum can cut years off of your private student loan repayment. Here’s an example (I used piti.us for my calculator):

Loan Amount: $10,000
Repayment Term: 15 years or 180 months
Interest Rate: 6.0%
Monthly Payment: $84
Amount paid in interest: $5,189

So if you were to pay $20 more each month and apply the payments directly to principal, you’re total paid in interest would be $3,667.

If we take this one step further, and say you pay $40 more per month, you would only pay $2,834 in interest. Plus, the higher your interest rate, the greater the savings.

To calculate your own monthly payments, check out CollegeToolKit’s College Loan Repayment Calculator.

3. Use auto-bill pay or set a calendar reminder to pay your loans

Even if you don’t get an interest rate reduction for auto-debit, it still is the best way to make sure your loans always get paid on time. The easiest way to rack up a ton of debt (and screw up your credit) in repayment is to miss a loan and get slammed with a late fee, or worse, go into default.

At the bare minimum, go into your favorite calendar app and make a recurring reminder for your 2-3 days before the payment is due each month. If you’re the forgetful sort, make it a week before.

Click here to compare private student loan lenders and find the loan that is right for you!

Do you have a good private student loan tip? Post it in the comments!


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17 Responses to “Three Tips to Get the Most Out of Your Private Student Loan”

  1. Patty says on September 6, 2010 at 1:28 pm:

    Great info! thanks:)

    Reply To This Comment
  2. Minteci says on August 30, 2010 at 11:35 pm:

    great article, great info

    Reply To This Comment
  3. prgiggles83 says on August 29, 2010 at 1:11 am:

    Glad to know this info. Very helpful

    Reply To This Comment
  4. shenai says on August 25, 2010 at 12:14 pm:

    cool article

    Reply To This Comment
  5. shenai says on August 25, 2010 at 12:13 pm:

    very resourceful

    Reply To This Comment
  6. Lydia says on August 24, 2010 at 8:01 pm:

    EXCELLENT INFO!

    Reply To This Comment
  7. Patricia says on August 23, 2010 at 1:41 pm:

    Very useful information, thank you!

    Reply To This Comment
  8. joe says on August 20, 2010 at 7:09 pm:

    cool

    Reply To This Comment
  9. Nelson Muna says on August 20, 2010 at 11:59 am:

    Very Informative !!! You have us at heart. Thank you !!!

    Reply To This Comment
  10. Rose says on August 20, 2010 at 10:03 am:

    helpful tips

    Reply To This Comment
  11. Bridgitte says on August 19, 2010 at 12:39 am:

    very informative

    Reply To This Comment
  12. May says on August 17, 2010 at 3:27 pm:

    interesting.

    Reply To This Comment
  13. ana says on August 17, 2010 at 12:14 pm:

    very informative and helpful!

    Reply To This Comment
  14. alisha says on August 16, 2010 at 11:12 pm:

    oh

    Reply To This Comment
  15. Sarah says on August 16, 2010 at 10:03 pm:

    this is really informative

    Reply To This Comment
  16. fred says on August 16, 2010 at 12:32 pm:

    nice article

    Reply To This Comment
  17. Paige says on August 16, 2010 at 3:47 am:

    …actually, the Scholarship Points code grants 15 points.

    Reply To This Comment

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