How to Earn Interest from Student Loan Money
By HSB
One of the reader had asked had following questions about Student Loans.
- How to save on Student Loan Interest
- When to get the Student Loan( to minimize the interest rate)
- What about exchange rate
It will be difficult to obtain students loan in U.S. as an International Student. They will usually require co-signer (relative, friend, who must be citizen or permanent resident) must co-sign for your loan approval. Recently few Business Schools have introduced programs where International students can get student loan without co-signer. But, that option is not available to all programs and international students.
Student Loan Interest Rates
Higher education student loan in India will have interest rate 12-13% which is much more compared to 4 to 9% in US Banks. So, here are few ways to save money on your student loan interest that you get outside United States.
First first semester, lets assume you withdraw $10,000 in total from Student Loan
- Tuition Fee : approx $5000
- Living Expenses : $5,000
Per month living expense will be around $350 to $700. You will be left with $4300 in your student free checking account ( How to Open Bank Account in US and Types of Bank Account). Student checking account doesn’t pay interest. Also, savings account with typical banks will be less than 0.5% interest rate.
If you have $4000 in Savings Account, per month you will be paid $3.33 per month or so. Instead, you can deposit $4000 in Online savings account that will pay you around 2.00% per year. Other idea would be to get CD’s (Certificate of Deposit) which is similar to Fixed Deposit in India. Its available in various terms like 3months, 6 months, 9 months and so.
Save Money
Month 1 : Estimate your living expense and have some back up money( ~3 months). You can have $1,500 in your checking account. Buy a 3-month CD for $3,500.
Month 4: Take $1,500 from 3 months and buy another CD for $1,500.
How much will this pay you?
- CD -1 : 3 months, 5% APY = $38
- CD -2 : 3 months, 5% APY = $25
Total Savings = $63
Note – Current interest Rates is around 2%. It was 5% in 2007. Due to economy, rates have dropped low. But, when economy improves, interest rates will do up.
Some little bit here and there you can ear money by effectively managing your money. This will effectively minimize your interest rate that you will pay for Student Loan.
Related posts:
- How to Save Money on International Student Loan.
- UK Student Loan Interest 0%; Should US Follow UK?
- Open bank account and earn money
- Student Loan: How to use the money and save more?
- How to Use Student Loan from India
