Unsubsidized Student Borrower Loans: Repayment while in school

twoinanddone
Sun, 29 Apr 2018 06:56:39 +0000

The information on the amount owed is available to the credit bureaus, but they do not change the status of the loan from ‘deferred while in school’ to a repayment status. If you pay the interest in Jan and Feb, that would change the outstanding balance but would not change the status, and not paying the interest in Mar or Apr would not make you delinquent or past due. Also, paying the interest every month still wouldn’t change you to a repayment (‘paying as agreed’) status, as you really aren’t paying as agreed.

Some people do that (pay ahead) thinking it is going to be building credit (more points on the credit score) but that is unlikely to happen because there are no payments due. Better to have a credit card to pay it off monthly or the electric bill. It also doesn’t work like revolving credit or a line of credit. One way to get ‘good’ points is by not using your entire credit balance. If you have $10k available on a credit card but only use $500 and pay it off, that’s ‘good.’ However, there is no upper limit on student loans, so only taking out $5000 when you could have taken $10k doesn’t help your credit score. You have less debt, but it isn’t the same as with the credit card. You could take out $0 in student loans (or credit cards for that matter) and it gets you nothing on the credit score.