Reducing your total loan cost when dealing with FAFSA loans can be achieved through several strategies:
Borrow Only What You Need: Before accepting a loan offer, carefully assess your financial needs and borrow only the amount necessary to cover your educational expenses. Avoid borrowing more than you need to minimize your overall loan balance and interest costs.
Explore Grants and Scholarships: Look for grants, scholarships, and other forms of financial aid that you don't need to repay. These can help reduce your reliance on loans and lower your overall borrowing costs.
Make In-School Payments: If you have unsubsidized loans, consider making interest payments while you're still in school. By paying the interest as it accrues, you prevent it from capitalizing (being added to the principal), reducing the total amount you'll repay over time.
Choose the Right Repayment Plan: When it comes time to repay your loans, explore repayment plan options offered by federal loan servicers. Income-driven repayment plans, for example, can adjust your monthly payments based on your income, potentially lowering your total loan cost over time.
Consider Loan Forgiveness Programs: Investigate loan forgiveness programs available for certain professions, such as public service or teaching. Meeting the eligibility requirements for loan forgiveness can significantly reduce your total loan cost.
Refinance or Consolidate Loans: After graduation, consider refinancing or consolidating your loans to potentially secure a lower interest rate and reduce your monthly payments, thus decreasing your total loan cost over the repayment term.
By implementing these strategies, you can effectively reduce your total loan cost and better manage your student loan debt.