5 Ways To Hack Your Student Loans

ways to hack your student loans

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  • Intro To Student Loans

    As the cost of college continues to rise, student loans are becoming more and more of the norm.

    Loans are sums of money borrowed from a lender that must be repaid, almost always with interest.

    Student loans can be made by several lenders. Some students opt to take loans from the federal government. Others choose private banks or financial institutions.

    Student loans can come in two forms, subsidized and unsubsidized. Subsidized loans are given to those who qualify based on a specific financial need. Unsubsidized loans are given to those who don’t qualify for financial reasons.

    The process to pay back student loans generally begins once the loans are taken out. Loans are generally required to be repaid with interest. On average, the interest rate on a student loan is 5.5.%. While repaying student loans can feel daunting, there are several ways to “hack” your student loans.

    Bimonthly Payments

    Student loan payments generally occur once a month, and most people opt to pay that monthly fee. But, it actually may be more beneficial to split up your monthly payment into two bimonthly payments.

    If you choose to pay once a month, you’re making 12 payments per year. But if you choose to pay twice a month, you end up making 13 payments a year. As 52 weeks per year divided by 2 comes out to 13. These payments are also half the price of your singular monthly payment.

    Many loan holders opt for this method because it can help with budgeting and money management. Splitting up the sum into two parts per month can help with balancing spending.

    If one week you end up having to spend more money, your halved loan payment is less of a hit to the bank account. Additionally, since you’re paying 13 payments per year as opposed to 12, you’re actually chipping away at your debt faster. While it’s not a huge extra payment, any amount paid back extra per year is a win.


    Upon graduation and finding a career, you may find yourself in a position where you can afford to pay more than your monthly payment. Depending on your situation, it would be in your best interest to pay more per month than the monthly payment that is required.

    Not to mention, all education loans are penalty-free with prepayment. Meaning, you won’t be penalized for paying more than your monthly payment. Not to mention, prepaying one month doesn’t lock you in for a year of paying more.

    If you happen to have more lucrative months, you can extra on those, but continue your minimum payment on the others. Paying extra, even just one or two months out of the year can seriously help reduce your outstanding balance.

    One thing to keep in mind is if you opt to pay extra per month, make sure to let your lender know. If you pay extra without specifying that it is for the current month, it could be viewed as an advance payment for the next month.

    Don’t Wait Until Graduation

    This tip isn’t for all students, as some programs simply don’t allow for time to work outside taking classes. But, for those who can work while attending school, factor in small loan payments into your monthly budget.

    Most students wait until graduation to begin paying off their debt, but for those with unsubsidized loans, the interest starts accruing even while you’re still in school. While you may not be able to make substantial payments towards repaying your debts, even small payments can help offset the interest that is building.

    If working a standard job isn’t in the cards, consider if your school has work-study programs that you can apply for. Work-study programs are part-time jobs offered by educational institutions in which students work to earn money that gets put towards educational expenses. This is particularly useful if you find that budgeting out money for loans is something you opt-out of when it comes down to saving.

    Work-study money has to go to educational expenses, so it is essentially like forced budgeting. Generally, these work-study programs take place on campus so if transportation to an external job location is hindering your ability to work while in school, this could be a good option.

    Look Into Tax Breaks

    Depending on your situation, you may qualify for the student loan interest deduction. The student loan interest deduction is a tax deduction that allows you to take up to $2,500 of the interest you paid on student loans from your taxable income. This reduces your taxable income for the year, so depending on your tax bracket you can reduce your tax payments by a substantial amount.

    other related articles of interest:

    To qualify for this deduction, you have to fulfill a certain set of requirements. The student loan has to be taken out by the taxpayer, the taxpayer’s spouse, or the dependent. The loan has to be taken out during the academic period in which the student is enrolled.

    The college or university must be an eligible educational institution that is managed by the U.S. Department of Education. The money has to be used for qualified higher education expenses which include tuition, books, and any supplies needed for school work.

    Unfortunately, room and board don’t qualify. Lastly, the loan must be used within what is considered to be a “reasonable period of time”. This period is considered to be 90 days before or after the academic period.

    Talk To An Advisor

    Student loans are daunting. There is no shame in feeling overwhelmed when trying to figure out the best way to pay back your student loans. The thing about repaying loans is that there is no right way to do it.

    Payment plans and payment strategies are very personalized based on your financial situation, your income, the number of loans you have taken out, the interest rates, and who your lender is, among so many other factors. Speaking to an advisor can be very beneficial if you’re unsure of how to go about paying back your loans.

    They are trained professionals that have a lot of knowledge and experience in the loan repayment process. They can help you put together a strategy that fits your lifestyle and situation. Having a plan is one of the most effective ways to stay on track with repaying your loans.

    Bottom Line

    Unfortunately, student loans are a part of many students’ academic journeys. But paying off those loans doesn’t have to be a seemingly impossible feat.

    There are plenty of resources and strategies that can help you pay off your debts effectively and efficiently. Whether it’s through front-loading a large sum of the payments or creating a sustainable budgeting plan, anyone can pay their loans off.

    Image Credit: ways to hack your student loans by envato.com

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