Two Main Pittfalls of Legally Not Paying on Student Loans

I have discovered, to my dismay that I owe more money to my student loans today than when I graduated college. How did this happen?

(1) I have been paying off my student loans using the graduated payment option and (2) I have been deferring my student loans because I am still taking classes on a part time basis.

(1) I consolidated my loans about 18 months ago. Since then, I have over 1,000.00 more dollars to pay off. This occurred because while I only had to pay a little over $250.00 per month, the interest on my student loans was almost $400.00 a month. I picked the graduated payment option because the standard payment would have been over $500.00 a month. I could not afford this. I'm only teaching part time while working two other jobs. While I couldn't afford the $500.00 plus payments each month, I can afford the $400.00. My educational services company does allow me to pay over the minimum so I am able to pay all of the interest and some of the principal on my student loans now.

(2) The problem with being in deferment on student loans is that not all student loans are subsidized by the government. What I found out was only half of my student loans that I consolidated are subsidized. That means that when I am back in school, the interest on my student loans is costing me about $200.00 a month. I am taking a class right now and am in deferment. I noticed that the amount of my student loans is slowly rising. However, I can still pay on my student loans and decrease the amount I owe instead of watching it increase.

Now that I am aware of how the interest can add up when legally not paying my student loan, I plan to pay it on a regular basis even if I don't have to. I know now that even when I was in school getting my master's degree, I could have been paying the interest on my unsubsidized student loan in order to keep the total amount I owed lowered.

A way to benefit from payments on student loans is the amount of taxes owed each year. The student loan interest that was paid over the year may be deducted from taxes owed. Please check with the Internal Revenue Service to make sure you qualify.