Ten Tips for Managing In-School Payments on Your Loan
A majority of students lean on personal and family funding to support their postgraduate studies in the U.S. According to the Institute of International Education’s 2024 Open Doors report, 54.5% leveraged personal savings, while approximately 40% of students received funding through a current employer or their U.S. university. For some students, borrowing an education student loan is necessary to achieve their academic pursuits.
If you have student loan debt and want to make progress toward paying it off while you’re in school, here are 10 ways to make payments manageable.
1. Familiarize yourself with your loan terms
There are many different types of education loans, so it’s important to understand loan terminology, the features of your loan and what it means for you. For example, your loan might offer loan deferment while you’re enrolled in school or a grace period after graduating. If this applies to your loan, ensure you’re clear on what “deferment” and “grace period” means.
Typically in a deferment or a grace period, you’re not required to make monthly loan payments. This feature can be convenient, but interest typically accrues during this time, which increases your total borrowing cost over time.
2. Establish a realistic budget
While you’re in school, keeping your expenses low allows you to prioritize your in-school loan payments. Setting a practical budget can help you keep track of your finances.
The 50/30/20 budget is a straightforward strategy that’s easily adapted to your unique financial situation. The budget is ideal for students since it establishes broad spending categories for “needs,” “wants” and “savings or debt repayment,” instead of tracking every purchase.
To apply the 50/30/20 budget, follow these guidelines for your monthly income:
- 50% to “needs”: This includes tuition and fees, books, housing, groceries and transportation.
- 30% to “wants”: Non-essential expenses that aren’t critical, like buying a sweet treat, takeout food and entertainment.
- 20% to “savings/debt”: This category is where your in-school education student loan payment falls. Twenty percent of your monthly budget should be set aside to pay for your loan and for emergency savings.
3. Enroll in automatic payments
Some lenders incentivize students to enroll in automatic payments by offering an interest rate benefit. As part of the educational loan requirements for auto pay, you’ll need to provide the lender with a bank account to pull payment from. Typically, you can set a recurring date on which your payment will automatically process each month – either on or before its due date.
The automatic payment feature gives lenders the peace of mind of receiving timely payments. In exchange, they offer a nominal rate discount, like a 0.25% reduction from your loan rate.
4. Consider an on-campus job
On-campus employment lets you offset living and discretionary costs so you can free up funds toward in-school loan payments. Plus, working on campus makes it convenient to go from the classroom or lab, straight to work without worrying about transportation or commute time.
As an F-1 student, your visa allows you to work on-campus for up to 20 hours per week during the active school term. To learn more about restrictions and requirements, contact your designated school official (DSO).
5. Make interest-only payments
Depending on your loan’s repayment options, you might be able to make interest-only payments. Instead of making a full monthly payment – which includes a portion of the principal balance, plus interest charges – you’ll only be responsible for paying the accrued monthly interest while school is in session.
This option keeps your loan balance from growing beyond your original borrowed amount. It also helps you pay off the debt faster, compared to deferring your loan payments until after graduation. And most importantly, if you make interest-only payments you will minimize the overall interest you pay over the life of the loan, ultimately keeping your borrowing costs low.
6. Apply leftover aid toward your loan
Putting excess scholarship or grant aid toward student loans you’ve borrowed for past years puts a dent in your repayment journey. Scholarship and grant funding doesn’t need to be repaid and is considered gift aid.
This strategy can significantly reduce your outstanding loan balance after leaving your postgraduate program and helps shorten your repayment timeline. Just make sure that leftover aid isn’t needed toward other critical expenses, like rent or tuition.
7. Take advantage of student discounts and resources
Maximizing student discounts is another way to decrease your personal expenses so you can divert more of your funds toward in-school loan payments. Your university student ID can help you unlock discounts for public transportation, local restaurants, entertainment, school supplies and more.
It’s also worth exploring whether your school or the local community around campus offers a food bank. A food bank, or food pantry, is a resource available to students and others in need. A food bank or pantry offers basic food essentials, like uncooked grains, soups and other non-perishables to reduce your grocery bills when there’s a true need.
8. Get guidance from a financial aid advisor
Your school’s financial aid advisors are knowledgeable about U.S. educational loan requirements. They can explain lending terms, identify funding options and structure a manageable in-school repayment plan with you, based on your repayment goals.
9. Plan ahead with a student loan payment calculator
Using a student loan payment calculator provides a visual breakdown of your loan’s monthly accrued interest, monthly payment amount and total interest paid over the entire loan term. Loan calculators can also illustrate how in-school payments affect your total repayment and interest savings.
Some calculators also show your payments and interest under different scenarios. For example, when making interest-only payments while in school versus deferring all payments until after graduation. This insight can help you plan your finances so you stay on track toward reaching your repayment goal.
10. Communicate with your lender
Ultimately, your lender is your best resource if you have questions or challenges regarding your educational loan requirements. Keep an open line of communication with your loan lender.
What’s the smartest way to repay student loans?
Whether you have no-cosigner international student loans or another type of education student loan, making in-school payments can help you stay ahead of your student debt. Balancing a school workload and loan repayment can be difficult to manage, but not impossible. Try a handful of the tips above to ease the burden of making payments while you’re still in school.
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