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In-School Payment Option: Private Student Loans

Benefits of In-School Payments

Going into student loan debt for college is often necessary for many families to achieve the goal of a higher education. If not done responsibly, managing debt after graduation can become an overwhelming task. Certain student loans, such as Subsidized Stafford loan and the Perkins loan have interest paid for by the government while the student is enrolled in school. However unsubsidized Stafford loans and private loans do accrue interest while the student is in school. Interest will continue to compound over the duration of enrollment.

In-school payments allow the student to make a standard minimum monthly payment towards the student loan. This develops healthy debt repayment habits and can greatly reduce outstanding student loan debt when compared to not making any payments while in school. This allows the student to develop a credit history for future loans after graduation.

The ability to make a payment towards loans while in school has been available for both federal and private loans for many years, but generally not promoted by private student loan providers and typically ignored by the public.  In the past, most student borrowers have elected to defer loan payments until after graduation. In-school payment provides the ability to reduce the student loan debt load students face after graduation.

What are the benefits?

  • Lower total student loan interest expense
  • Build better borrowing habits
  • Acknowledge student loan debt as it accrues
  • Build credit history while in school