The hard part of dealing with student loan debt is not making payments. The hard part is navigating the complex world of the student loan repayment system. There are several repayment plans, student loan allocation programs, different options offered by each state, and more.
Every story I hear about student loans is similar: I have this debt and I want it to be gone. Of course you do! I want it to be gone for you! But where do you start?
I wanted to break down the best strategies you can use to pay off your student loan debt. Perhaps these relate to your situation and you can follow this guide today. Not all of these will eliminate all of your student loan debt, but any solution can help.
If you’re not entirely sure where to start or what to do, consider using a tool like Chipper. Chipper is a student loan helper tool that will guide you through the best student loan repayment plan and lending options. They even have a concierge option to work with you! Check out Chipper here >>
1. Qualify for a federal student loan grant program
The first way to get rid of your student loan debt is for those with federal student loans. These are student loans that are usually processed by the Ministry of Education or one of the student loan service providers. This includes many different student loan programs that are administered by the federal government.
There are three major student loan programs and several minor ones. The most popular federal student loan program is public service loans. This program provides student loan waiver for people who have worked in the civil service for 10 years. The public service includes not only government agencies, but also many nonprofits, educational agencies, and service professions such as law enforcement agencies or public safety.
The other two common ways to get federal student loan issuance is by being a teacher who has its own teacher loan allocation program (which doesn’t cover as much as the PSLF) and military service loan allocation ( which will also expire). on the PSLF program).
2. Find government support for your student loans
Many states also offer various student loan allocation programs for your student loan. Forty-six out of 50 states offer at least one program, with some states offering many different programs to cover a variety of loan types, employment, and more. In fact, Kansas offers student loans of up to $ 15,000 for just living in certain parts of the state.
California, for example, offers student loan options to doctors, health professionals, and dentists. Meanwhile, Texas has offered student loan services to professors, speech therapists, nurses, doctors, teachers, and lawyers.
Or my personal favorite, Maryland offers home loan purchase in Maryland!
Before you give up on not qualifying for state loan programs, check your state and see if it offers incentives or support:
3. Find out if your employer offers tuition reimbursement
Did you know that more and more employers are offering school fees to make school costs easier for their employees? It’s one of the ways I paid for school – because I worked full-time during my college graduation. Some companies, like Starbucks, even offer full degree programs to their employees as part of their employee benefits.
Even better, some companies are now offering their employees student loan repayment programs – in which the company pays off portions of their employees’ student loan debts.
Working while studying is one of the smartest steps any student can take. But if you are already at work, make sure you are taking full advantage of your employer and see if a tuition reimbursement program cannot help you settle or pay off some of your student loan debt. Many of these programs require you to pay in advance (i.e. take out a student loan) and show your employer that you have completed the course. Once you complete the course, your employer will usually reimburse you through your paycheck.
Finished school and buried in student loan debt? Some employers offer potential employees contract bonuses and other perks. But you have to ask. In addition to negotiating your first salary after graduation, you’ll need to see if your employer offers help with your student loan debt.
4. Consolidate your federal student loans
The next way to help you clear your student loan debt is to consolidate your federal student loans. While consolidation alone won’t help you lower your payments or your student loan balance, it can get you organized financially.
If you’re starting college before your freshman year of college, you’ve likely already signed up for your first student loan. Then register and receive a new student loan every year. And if your federal student loan doesn’t cover the full amount of your tuition fees, chances are you have private loans too (which we cover below). That means you can have four or more different loans and payments. How confusing!
To make matters worse, each of these loans could have a different payment amount and a different due date. If you screw up a payment, you can damage your creditworthiness and your financial future.
5. Find a repayment plan that suits your solvency
The next step in eliminating your student loan debt is finding a repayment plan that suits your solvency. After you graduate, you will automatically be added to the standard repayment plan. These are 10 years of even payments – which may not work for all borrowers. The problem is, many graduates don’t know they can change that plan – they just assume they’ll get stuck paying the student loan.
If you have a federal student loan, there are plenty of amortization plans out there that could help you make your student loan debt more manageable – which, in turn, will help you clear your debt faster.
If you plan that your income will increase in a few years after graduation, you can look at a repayment plan like Graduated, which has a lower upfront payment that increases over time. If you want a lower monthly payment but want to pay it over a longer period of time, take a look at the Advanced Amortization Schedule.
6. Set up an income-based repayment plan with lending
When one of the standard options above still doesn’t work when choosing a repayment plan, federal loans offer income-based repayment plans. There are several versions of this, but the most popular are Income-Based Repayment (IBR) and Pay-As-You-Earn (PAYE).
The great thing about IBR and PAYE is that they offer a “secret” benefit – student loan waiver. Little do many people realize that these two plans offer student loan waiver at the end of the repayment period. The remaining balance of the loan is waived, but unlike the other federal student loan waiver plans, you owe tax on the waived amount. In any case, this is an excellent benefit.
With either plan, all you need to do is provide proof of income and the Department of Education will charge you a monthly payment of 10% of your disposable income. That means your monthly student loan installment is affordable! You will have to re-submit your income annually, and your payment could increase as your income increases.
If you work in the public sector, signing up with IBR or PAYE and combining it with PSLF is one of the best ways to minimize your student loan debt.
7. Refinance your student loans
If you have private student loans, the best way to reduce those debts is to refinance your private loans at a lower interest rate. This not only saves you money in interest over the term of the loan, but also reduces your prepayment.
One of the best tricks is to refinance your loans at a lower rate but still keep paying your previous payment amount. This could potentially cut your loan by years and save you hundreds or thousands of dollars.
One of the best ways to refinance your student loans is to look at a comparison tool like Credible. Credible helps you get and compare quotes from multiple lenders after completing a single form, so you can find and choose the loan with the lowest interest rate and best terms. As a bonus, College Investor readers can receive a gift card bonus of up to $ 1,000 when they refinance with Credible!
You can check out our list of the best student loan refinance lenders here.
One of the biggest concerns with personal student loans is that most personal student loans have floating rates. We’ve put together an in-depth explanation of private variable rate student loans, and how the money saved by paying off the lower prepayment is almost always worth it in most cases. Only in very rare cases will your floating rate payment be higher than your fixed rate payment.
8. Make more money
Finally, if none of these options work (or none of them completely eradicate your student loan debt), the next best thing you can do is make more money. I firmly believe that anyone can make another $ 100 a month if they try. That extra $ 100 per month can be applied to your student loan debt, removing $ 1,200 per year from your loan balance!
Not sure where to start? You can easily start making extra money doing things you already do, or you can take on one of these 50+ side businesses. The possibilities are endless. Check out our full guide to making extra cash here.
It might sound counterintuitive, but earning more is a great way to pay off student loan debt. In fact, wanting to make more money was probably why you went to school (and took out student loans).
What other tips and tricks do you have for getting rid of student loan debt?