How to make payments on your student loan while in school
Starting to pay your student loan while you’re still in school may seem like a challenge, but it’s definitely possible and a good idea in the long run, especially as an international student.
Making in-school loan payments prevents your loan balance from ballooning while you’re earning your degree. Plus, timely payments help you build a positive credit history in the U.S. Credit-building will come in handy if you want to rent an apartment, buy a car or take out another loan in the future.
If you have a student loan requiring in-school payments, there are a number of benefits. Here’s a closer look at the advantages of in-school loan payments, along with how to make payments as a student.
Why paying your loan while you’re in school is a good idea
Although it might be tempting to ignore your student loans until after you graduate and start working full time, there are several benefits to making payments while in school. These include:
- Paying off the interest as it accrues: Student loans accrue interest right away, which means you pay back more than the amount you initially borrowed. If you can pay off the interest right away, you can reduce your costs of borrowing and prevent your balance from growing while you’re in school.
- Getting out of debt faster: Getting started on debt repayment right away means you’ll pay off your student loans faster than if you postponed payments until after you graduated. Less time in debt also means smaller interest charges overall.
- Reducing your postgraduation debt burden: When you make in-school payments as a student, you won’t have as much student debt to deal with after you graduate. You can feel more financially secure and less burdened by your student loans while you start your career and transition into the next phase of your life.
- Building your credit history in the U.S.: When you make payments on your loans, those payments are reported to the major credit bureaus in the U.S. Over time, your timely payments will help you build a positive credit history and score. Having an established credit score can make your postgraduation life a lot easier when it comes to renting an apartment, applying for a credit card or taking out another loan.
How to pay off your student loan while in school
It might be easier than you think to make monthly in-school payments. If, for example, you were approved for a US$40,000 education loan from MPOWER Financing and you’d obtained your student visa to study in the U.S., you could cover payments through a .25% auto payment discount and income from a job. Specifically, along with your studies, you might be hired for a paid co-op internship, which earns the money you need to make interest-only, monthly payments in the amount of US$240.
You can see exactly how much your in-school payments will be through a lender’s payment calculator, like this MPOWER Financing loan payment calculator.
The tool will reveal what your monthly payments will be in school and during full repayment.
When it comes to paying off your student loans while in school, here are the general steps you’ll need to take:
- Review your loan agreement: Every lender sets its own requirements, so read over your loan agreement to see what payments are due while you’re in school and when. A lender may require interest-only payments, or you might get to choose among interest payments, US$25 per month payments or full monthly payments.
- Connect your bank account: Your next step is sending payments from your bank account. You can usually do this online by creating an account with your lender or loan servicer and providing your banking details. Make sure you’re using the official website before sharing any sensitive information.
- Consider using auto pay: If you have enough money in your account, consider setting up automatic payments from your bank account each month. Using auto pay will mean you can “set it and forget it,” and you won’t have to worry about missing any bills while you’re busy studying for an exam or writing a research paper. What’s more, you might score a discount on your interest rate by using auto pay. For instance, MPOWER Financing loans currently offers a 0.25% discount by opting into auto pay.
- Review your budget and income: Finally, look over your budget and any sources of income to make sure you have the funds for your in-school payments. You might earn money from a paid internship. You could also work a part-time job. Earning some money as a student can help you afford student loan payments, along with books, groceries and other costs that come with attending school in the U.S.
Information about MPOWER loans
MPOWER Financing offers student loans up to US$100,000 total to help international students earn their degree in the United States or Canada. If you take an MPOWER student loan you’ll make interest-only payments while you’re in school and for six months after you graduate.
Your in-school payments will pay off the interest that accrues on your loans from the beginning, so you won’t have to worry about your loan balance growing while you’re in school. Plus, your timely payments can help you build credit in the U.S., which could have major benefits for your finances (and life) in the future.
Wherever you are on your educational journey, learn more about MPOWER’s student loans for international students here.
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