Student Loan Tips

When you are in college, you take out student loans really without thinking too much.  You have to go to school, so it never really enters your mind how you are going to pay for them when you get out.  Here are some tips you should think while attending school and after you graduate:

While in school - Student Loan Advice:

• This may surprise you, but maximize the amount of loans you take out instead of using your credit cards.  Why, you may ask?  You do this since after you graduate, you can deduct the interest from your student loans but you can't for credit cards.  Add to that that student loan rates are usually cheaper than credit cards, and you have a no brainier!  If you need to buy a car, etc. use student loans first since they are usually the cheapest way of getting financing while you are in school. 

• Of course be prudent when borrowing money, but remember you will probably get a decent job out of college, but you will not have as much TIME to spend you money.  There is nothing wrong with using a student loan by borrowing from your future income and enjoying your college life now, just be responsible about it.

• Get a credit card, and use it smartly to build great credit.  (see our credit card page).  Use your student loan money to pay off your credit card every month.  After you graduate, you can deduct all your interest.  Plus, you will get any miles or points as benefits, so you get the best of both worlds, convenience, points, and building great credit from using the credit card, cheap interest from the student loan.

After you graduate - Student Loan Advice:

• Consolidate, consolidate, consolidate those student loans!  Usually the school gives you many different loans from all sorts of companies.  You can never keep these things straight and you will definitely miss payments that will crush your credit rating.  The smart thing to do is consolidate everything into one payment and have it deducted out of your bank account automatically. Usually, companies will give you a discount on the interest rate if you choose this option, plus you will never have to think about it and miss a payment.  You will also be building great credit as you pay your loan off so when you are ready to buy a car or house you will get a great interest rate.

• Deduct you interest expense on your taxes.  Most people forget this, be smart and take advantage of this deal by the government.  Unless you make over 65K per year, you can deduct the full interest amount off your taxes.  Current interest rates on student loans are 3%, plus you can save an addition 28% off you taxes, so your effective rate can be as low as 2%This is a great deal and you should take full advantage of it instead of paying credit card companies 10%+.