Benefits of making in-school payments on your student loans
August 24, 2023 – 4 mins
Are in-school payments right for you?
Let’s start by answering a common question: “Can I make student loan payments while I’m in college?” Yes, you can—and should seriously consider it. Here’s why.
Paying student loans while in college could save you money
By now, you’ve heard about interest. Interest is the cost you’re charged for borrowing money. Loans also list an “annual percentage rate” (APR). APR is like an interest rate, but it also includes all, fees, discounts, premiums, and more. It’s expressed as an annual percentage rate based on how long it will take to pay off your loan in full.
With many student loans, interest starts accruing—or adding up—as soon as your funds are sent to your school. The interest you’re being charged will build up while you’re in school, ultimately increasing the amount of money you’ll have to pay back. However, there are a few things to note:
- There are two kinds of federal student loans: subsidized and unsubsidized. For subsidized student loans, the government covers the interest for you while you’re in school. For unsubsidized student loans, they don’t.
- For private student loans, interest begins to grow as soon as the funds have been distributed to your school.
By making payments while you’re in school, you could help lower the total cost of your student loans. If you pay the interest—or even just a fixed amount every month—it could save you money in the long run.
Don’t think you can afford to make payments during school? Consider using your tax return, birthday money, or money from a side hustle. Every little bit helps.
Need money for college?
Consider a Sallie Mae® private student loan
- Available for online or on-campus study
- Competitive fixed and variable rates
- No origination fee or prepayment penaltyfootnote 1
- 95% of undergraduate students who’ve been approved with a cosigner were approved again when they returned with a cosigner the following yearfootnote 2
You can make payments no matter what repayment option you chose
When you first get your student loan, you choose to either make in-school payments or defer (put off) making payments until after graduation or leaving school. Deferring payments can be helpful for people who can’t or don’t want to make regular payments during school. But with private student loans, interest continues to accrue all through the years you’re in school and you’ll end up paying more for your loan.
If you choose to defer your loan payments until after graduation, it just means that you don’t have to make payments while in school. But you’re absolutely allowed to make payments if you’re able. And that can help you save money on your total loan cost!
Making payments could help you build credit
Another benefit of paying student loans while in school is that it can help you build credit. Credit is the ability to borrow money, based on the lender’s belief that you can pay it back. Most students don't have much credit history, so paying your student loans on time is an opportunity to build it while in school.
Making payments on time, every time, is important to your credit health. It proves that you’re a responsible borrower and that you’re able to repay a loan. You’ll need good credit when you apply for things like a credit card, car loan, or mortgage.
Stay on track
By making student loan payments while you’re in college, you may be able to lower your total loan cost, make your post-school payments more manageable, and build credit.
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