Wouldn’t it be nice if college graduates could get to the end of their school requirements to discover that much of their loan has already been paid off?
Actually, there is a way to do this.
Some student loans allow parents to have in-school payment options. This method of paying down the debt on student loans is most common with Parent PLUS loans. These loans allow parents to pay down some of the interest and principal while students are still in school.
This is a viable option for people who are financing their child’s education if you do not plan to transfer the loan to the child once they are through with their tuition payments. Other loans allow more flexibility in transferring the loan to the child after graduation, but don’t get a Parent PLUS loan if you need to do this, because it is not guaranteed. This depends on the contract of the loan and it should be read and understood before signing.
Private companies are likely to allow making student loan payments in-school because they are usually backed by traditional banks and credit institutions that depend on regular revenue to stay solvent. It’s a good idea to inquire with private loans such as LendKey and others to find out if this is a way you can get a headstart on paying back the loan.
Some parents don’t want to do this, but it can save you a lot of interest payments if it is allowed within the contract that you sign. In-school payment options are something that should be investigated before signing and finalizing the loan.
Keep in mind that not all lenders allow the borrower to pay back the loan while the student is still in school. But it is a requirement of many federally subsidized loans.
Ask Questions Before Signing Your Student Loan
One of the most important things that parents of prospective students should do is to ask questions of the lender before signing any paperwork regarding the loan. Once signed and once the money is disbursed, it’s hard to take back the contract. Read every line of the contract before signing and list questions that need to be asked before agreeing to the terms.
Student loan contracts are a long-term commitment and they must be handled as such. Some extra research and time put into the process at the front end can pay off big in the future. Keeping the loan payback amount as low as possible should be the primary goal. For more ways to pay off your student loans faster, check out our article here!