If you have a student loan debt, you’re not the only one. Over 40 million Americans have some type of education debt. While it is smart to invest in yourself and your children’s education, loans can make it difficult to save for retirement or other financial goals.
There are many ways to make student loans more manageable. These six tips will make managing student loans less stressful if you feel overwhelmed.
To get a lower rate, refinance your loans
Refinance a student loan debt is a process where you work with a new lender to repay your original loan or loans and obtain a single loan at a lower interest rate. This can help you save thousands of dollars.
Refinance is an option for student loan debt holders who have been away from school for a while or received a job offer letter while in graduate school. This allows them to take advantage of lower rates and increase their income. Refinance can help you save thousands in interest.
Change to bi-weekly payments
This tip is often used to save money on mortgages but also works well for student loans.
This is how it works: Instead of making one lump sum every month, you split it into monthly payments that are made every other. If your student loan payment is $1200 per month, you can switch to making $600 payments every other week. Splitting it can help you reduce interest payments. The bi-weekly payments take less time to accrue.
Your loan’s life expectancy will be cut by bi-weekly payments. Bi-weekly payments that are timed to your paycheck will result in two months of the year with three pay cycles and three loan payments. That’s a total of thirteen monthly payments. Use this calculator to find out how much you can save.
Consolidating loans can simplify your payments if you’re happy with your rate.
Refinance is an option for loan holders who have interest rates above 5%. Consolidating federal loans with low-interest rates can make your life easier. While refinancing won’t make you save money on interest, consolidating your loans can make you more efficient financially by allowing only one payment to be tracked. You can track student loans and all your financial accounts using a free app, Personal Capital.
Your new loan will have an APR based on the average weight of all loans being consolidated. If you have a $10,000 loan at 6% and a $5,000 loan at 5%, the new consolidated interest rate will be 5.67%. This rate is calculated as follows: $10,000 equals 2/3 of the total loan amount and $5,000 equals 1/3. Then multiply each interest rate by the fraction you have and add them together (2/3 * 6 + 1/3 * 5 = 5.67%).
- STUDENT LOAN REHABILITATION
- Private student loan forgiveness programs
- Pros and Cons of Paying Off Student Loans Early
You have many options to get student loan debt forgiveness. But, if you aren’t eligible, make a plan.
There are many options for loan forgiveness cancellation or discharge. However, only loan holders who meet certain criteria can apply. Unexpected circumstances like the closing of your school, bankruptcy filing, or permanent disability can make you eligible. You can apply for loan forgiveness programs that are based on your employment or employer.
Teachers who teach full-time at a low-income primary or secondary school for five years consecutively may be eligible to have their loan forgiven through the teacher forgiveness program. After you have made 120 payments under a qualifying repayment plan and worked full-time for a qualified company, certain public sector jobs are eligible for forgiveness under the Public Service loan forgiveness program. Non-profits and government entities count as qualified employers.
Remember to apply for these programs, and to continue making on-time payments until you are accepted. These loan forgiveness programs are not for everyone. If you are unable to apply, consider refinancing to lower your rates.
Ask your employer about student loan debt aid benefits.
To retain and recruit talented professionals, a growing number of companies offer student loan assistance as an employer benefit. For example, PricewaterhouseCoopers launched its Student Loan Paydown program in which the company will contribute up to $1,200 per year towards paying down its employees’ debt. Refinance companies may also be partnered with other companies to offer lower rates.
Ask your employer whether they offer any benefits that you could use. You can always ask your employer if they offer a benefit. This will help you and all of your coworkers.
Automate your loan payments.
Automated payments are offered by many loan companies. Automated payments not only ensure that your loans are paid on time and avoid costly late penalties but also save you money in the long term.
Proactively taking action is the best way to help your student loans. You can achieve both financial and mental relief by getting your debt under control as soon as possible. Good luck!