Illustration by Lia Kantrowitz
Welcome to the VICE Guide to Life, our imperfect advice on becoming an adult.You may think student loan debt is as inevitable as death and taxes, but it doesnât have to be. You can actually start paying off the interestâand sometimes even the principleâbefore you even finish school. I certainly didnât know that when I was in college, and didnât make my first payment until I got my first bill six months after graduating. If I had been just a little more informed, I wouldnât have a monthly, panic-inducing $230 loan payment on my hands, causing nearly untenable stress and digging into my wallet.Student loan debt in the US now tops $1.5 trillion, with the average monthly payment around $393 a month. Thatâs no joke when youâre fresh out of college, desperately waving an English degree around, and canât find a job. As someone whoâs spent the last few years taking any possible freelance opportunity to keep afloat to pay hundreds of dollars in loans each month (in addition to rent and, well, life), I wish Iâd done my financial research sooner.Fortunately, many of you are still enrolled in school and can head off massive debt before youâre stuck out here in the real world with the rest of us. âGraduating seems so far out of reach when youâre a freshman,â said Jubilee Baez, a 2018 graduate of State University of New York, Morrisville who says she is now facing monthly payments of nearly $600 a month. âYouâre not even thinking about that right now⊠so a lot of college students arenât prepared to handle that burden making monthly payments toward their loans. Theyâd rather push that off to after graduation and worry about it then.âBut if you take a minute to think about the impact of your debt down the line youâll be way ahead of the game. âPaying as much as you can, as early as you can, is always a best practice when it comes to repaying student loans,â said Student Loan Heroâs Elyssa Kirkham.Of course, that means you need to know how much youâre borrowing in the first place, what the interest rate is, and what the monthly payments will be once you leave schoolâall of which you can find out by checking with your financial aid office and contacting your student loan servicer.For many of us, taking out student loans was the very first financial contract weâve ever signed off on, and once we signed on that dotted line we told ourselves not to worry about that ever-accruing debt until at least four years into the future. But thereâs a far better course of action.Here are three ways you can tackle student debt before youâve even graduated:Actually paying off your student loans while you are in college may seem impossible. After all, if you had the money, you wouldnât be borrowing in the first place. But just because you canât afford to pay the full loan amount back, that doesnât mean you canât start making interest payments right away. And if you have an unsubsidized federal loan (hint: you probably do), that interest starts accruing the minute the funds get paid out.Making interest payments on your loans while in school is surprisingly affordable. For example, if you borrowed $10,000 your freshman year, and start making interest payments as soon as you get the funds youâd only have to pay $42 a month, assuming the current five percent interest rate. Not only will you have wiped out the interest payments, youâll also avoid paying interest on all the interest payments you deferred while in school, something thatâs known as interest capitalization. Using that same $10,000 loan amount, that works out to a savings of $783. If your loans are closer to the national average of $33,000, youâll save about $2,500 over time.âI donât think many people know that you can make payments now, while youâre still in school,â recent grad Baez said. âAnd the financial aid offices tell you youâre not required to make a payment until six months after you graduateâkeyword, ârequired.â They donât tell you that you can start making payments now if you really want to. If that was common knowledge, Iâm sure many parents and students would probably be in less debt than they are now.âTo make the interest payments, log onto your student loan servicerâs website to run the numbers. Not sure who your servicer is? âItâs likely a company like Great Lakes, MOHELA, Navient or Nelnet,â Lifehacker reports, but you can always check with your financial aid office to find out for sure.Even if you have a minimum wage job on campus and can only afford to throw forty bucks a month toward interest, itâll make a difference youâre going to feel after you finish school.If your loan package includes extra funds you donât need, you can return the money. âStudents can accept, reject or reduce the amount of loans offered, but they might not know they could do so or do not ask enough questions to fully understand,â Daad Rizk, Director of Pennsylvania State Universityâs Financial Literacy Center, explained. This happens when youIf you return the funds you donât need within 120 days, the loan will be cancelled and you wonât have to pay any interest or fees on the money. âCanceling loans you donât end up needing is always best, as you wonât be responsible for fees and interest on those funds. But if 120 has passed, youâre stuck with repaying the loan,â said Kirkham.Of course, itâs better to cancel the loans before you even get them, if you can. For federal loans, you will typically get a notice from your school saying you have a two-week window to cancel the loan. Make sure to put your request in writing and send it via certified mail, U.S. News & World Report recommends.Another option is to save the money you donât need (preferably in an interest-earning account) and use it to make loan payments after graduation. Thatâs what Baez is doing now. âI accepted the entirety because I didnât want to end up short,â She said. But âat the end of the day that money wasnât mine in the first place.âGot a high-paid internship during the summer or found a part-time job that leaves you with a few hundred dollars extra each month? If so, consider putting that money toward the principal of your student loans now as that will reduce your total debt once you graduate. Any payment you make that exceeds the current amount of interest owed gets applied to the principal, resulting in a principal reduction.The great thing about paying off even a small part of the principal before you finish school is that thereâs no penalty for making irregular payments, since youâre still in the grace period. Whatâs more, youâll reduce the amount of interest youâll owe after school, because you have paid down part of the principle. So if you have an extra $100, pay that, or if a relative gives you some funds you donât need right away, consider putting those toward your loans as well. âMaking extra payments could save you thousands of dollars in interest charges you would have otherwise paid,â Kirkham added.The key to making this work is to be sure you still have enough money leftover to cover any other bills like food, your cell phone, or gas. âKeep your spending in check, and consider getting a part-time job while youâre in school to make ends meet,â said Student Loan Heroâs Rebecca Safier. âEven though you might have to make some sacrifices as a student, youâll be glad when you graduate without a ton of student debt to pay back.âYour future self will thank you.Follow Marco Margaritoff on Twitter .
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Tackle those interest payments
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Give extra money back
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