Set Up Payroll Allotment
Check with your jobs human resources department and see if your employer offers payroll allotment. With payroll allotment, a certain amount of your regular paycheck goes directly into another account and not into your main checking or savings accounts. If you dont see the money, you wont be tempted to blow your paycheck. Soon enough, you will have accumulated a nice chunk of change that can be used to make a lump sum payment on your student loans.
Where Should I Begin To Start Paying Down My Student Loans Fast
The path to paying down your student loans starts with a budget. , a certified financial planner with the personal-finance app Albert, recommends the 50/20/30 budget, where 50% of your income goes toward your essentials, 20% to your savings and investing, and 30% to whatever you want.
Begin this process by making a spreadsheet on your computer, using a budgeting app, or trying out a budget worksheet from a student loan company like Sallie Mae.
“Know who you owe and how much you owe,” says Rick Castellano, spokesperson at the student loan company Sallie Mae. “It sounds simple, but that’s one of the first things that we talk to students about. When it’s a federal student loan, that means knowing who your federal student loan servicer is, and that can change from time to time. That’ll help you to build the strategy around paying it down faster.”
You may also consider starting to pay off your student loans while in school, an option some students might not know they have. A recent report from Sallie Mae finds that 56% of families are making student loan payments while in school, which helps save on the overall cost of the loan.
“If you’re a current student and you want to start making payments now, you can definitely knock out some of the principal and make small payments to make sure that the interest doesn’t accrue,” Reyes says. “That way, you’re taking actionable steps to lower that debt.”
Balance Transfer Credit Cards Have Fees Limits And Introductory Windows
Given that direct credit card payments for student loans aren’t attractive when you look at the amount of interest you will accrue, balance transfers of your student loan balance to a credit card are often more appealing. Many of these balance transfer cards provide a lower interest rate for the amount you transfer, with some cards offering an introductory period where the APR is very low or even 0% through the first 12 or 18 months.
However, be aware that balance transfers often have limits on the amounts you can transfer, charge fees for either the amount you transfer or the number of transfers you perform, and apply higher APRs against your entire balance when any introductory window expires.
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Can You Refinance Sallie Mae Student Loans
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Sallie Mae offers private student loans to undergraduates, graduate students and parents. If you took out Sallie Mae loans to pay for college, you can and probably should refinance if it will save you money.
Borrowers can no longer refinance loans directly with Sallie Mae. But you may be able to refinance with Navient, a student loan servicer that was once part of Sallie Mae, if youre already its customer.
No matter who your servicer is, your best bet is to refinance student loans with whichever company offers you the best deal.
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Apply For Loan Forgiveness
Most income-driven student loan repayment plans lower your monthly payments by lengthening your loan term. While this might help in the short term, itll take you longer to get out from under your debt. Plus, you could end up paying more interest overall, particularly if you dont qualify for loan forgiveness.
While private student loans arent eligible for loan forgiveness, many federal student loans are. These programs allow all or some of your loans to be canceled after a set number of loan payments or time spent working in a particular occupation usually five to 20 years.
Check out the following loan forgiveness programs to see whether you might be eligible to apply:
Effectiveness level: High
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Can You Get Rid Of Your Student Loans
Usually, the only way to get rid of student loans is to pay them.
Federal student loans arent like other debts that have a statute of limitations and eventually fall off your credit report if you dont pay them. Federal student loans have no statute of limitations, meaning the government can try to collect their money for as long as they want.
Unlike other debts, student loans are rarely discharged during bankruptcy .
One clear path to getting rid of federal student loans without fully paying them off is to become eligible for student loan forgiveness or discharge.
Types of forgiveness and discharge include:
- Public Service Loan Forgiveness: Available to borrowers employed by a government or nonprofit organization who make at least 120 on-time payments while working for a qualifying employer.
- Teacher Loan Forgiveness: Available for up to $17,500 of forgiveness to teachers who work in a low-income school for five years.
- Closed School Discharge: Available to borrowers whose school closes while they are enrolled or soon afterward.
- Total and Permanent Disability Discharge: Available to borrowers who are permanently disabled.
Keep in mind that forgiveness programs often require you to make on-time payments for a specific number of years. These programs wont get you out of making at least some payments.
Its important to note that private student loans work a bit differently. Private student loans do not qualify for forgiveness programs.
Con: Lack Of An Emergency Fund
One more financial benchmark to consider is an emergency fund. Do you have one? Two-income households might shoot for three months worth of expenses single earners, closer to six months worth.
for many families. If youre in that group, you may want to build up a nest egg before accelerating student loan payoff.
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How To Get Your Free Chegg Benefit
Apply for and be approved for a qualifying Sallie Mae loan.1
We’ll send you instructions on how to activate your benefit by email. You have up to 1 year to activate your Study Starter benefit.
Select your benefit start date and create an account on Chegg.com . No purchase necessary.
Log back in to Chegg when you’re ready to start studying.
Borrow responsiblyWe encourage students and families to start with savings, grants, scholarships, and federal student loans to pay for college. Students and families should evaluate all anticipated monthly loan payments, and how much the student expects to earn in the future, before considering a private student loan.
1. This promotional benefit is provided at no cost to borrowers with undergraduate, graduate, or parent loans with a first disbursement between May 1, 2021 and April 30, 2024. Borrowers who reside in, attend school in, or borrow for a student attending school in Maine are not eligible for this benefit. Chegg Study® offers expert Q& A where students can submit up to 20 questions per month. No cash value. Terms and Conditions apply. Please visit for complete details. This offer expires one year after issuance.
SALLIE MAE RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS, SERVICES, AND BENEFITS AT ANY TIME WITHOUT NOTICE. CHECK SALLIEMAE.COM FOR THE MOST UP-TO-DATE PRODUCT INFORMATION.
Loans Go To Collections
Another potential consequence of defaulting on a private student loan that the lender may send your debt to a collection agency.
The agency will charge additional fees when trying to recoup the money. They usually add up to 25% more than what you owed initially on your principal, which only compounds the problem and puts you deeper in debt.
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Make Extra Payments Whenever You Can
Planning to pay more than the minimum payment each month can chip away at your student loan debt over time, but what about unexpected cash windfalls? You might win a cash prize, get a cash gift from a relative on your birthday, or receive extra money from a tax refund or insurance claim.
Rather than spending that unexpected cash windfall, consider using it to pay off your student loan debt faster.
As with planned principal payments, make sure your extra payment goes toward the loan principal rather than accrued interest.
Effectiveness level: Medium
Types Of Student Loans
Since private loans dont offer the same protections that federal loans do, the general advice is to seek private student loans after youve exhausted every federal option.
Federal student loans
Federal student loans are the first choice for many due to their low rates, flexible repayment options and federal protections.
The U.S. Department of Education offers the following loan options:
- Need-based: Direct Subsidized Loan
- Non-need-based: Direct Unsubsidized Loan and Direct Plus Loan
To apply for federal loans and additional financial aid, students must submit the Free Application for Federal Student Aid once every school year.
Your school will calculate how much youre eligible to borrow based on the cost of attendance and your familys financial information.
Final loan awards cant exceed loan limits set by the federal government, but the school may award you less than what you request.
The federal government limits how much a student can borrow annually and over their entire college career across different categories:
- Academic year
- Possibility of loan forgiveness
Private student loans
Private student loans are similar to personal loans, as they are issued by private banks or credit unions.
Private student loan lenders look at students and to determine interest rates and loan approval. Since most students dont have enough credit history, lenders often require a qualifying cosigner.
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Can You Use Sallie Mae Loans For Off Campus Housing
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Regarding this, can Sallie Mae loans be used for living expenses?
You can also use student loans for living expenses. You’re limited to borrowing the school’s cost of attendance that’s tuition and fees, books and supplies, room and board, transportation, and personal expensesminus any aid you receive.
One may also ask, can you spend your student loan on anything? While it’s healthy to spend student loan money on living expenses, there are other expenses that, if you use student loans for them, mean you could be making poor financial decisions. In general, avoid paying for anything that isn’t related to your education, such as: Travel. Clothes.
Also Know, what can a Sallie Mae loan be used for?
Things you should use your student loan to pay for: Books and supplies. Room and board Off-campus housing.
Is Sallie Mae considered a federal loan?
SLM Corporation , more commonly known as Sallie Mae, is a public corporation and a private-sector lender, so its direct loans are not federal loans. However, private entities often work as loan servicers for certain federal loans on behalf of the government.
If Youre Unhappy With The Customer Service
Sallie Mae has notorious problems with customer service, according to online reviews. They have a 1.14 out of 5 rating from customers on the Better Business Bureau as of January 27th, 2022, with 363 filed complaints. Specific complaints include inconsistent advice from customer service representatives and an unwillingness to work with borrowers who have problems making payments.
If youve had a negative customer service experience with Sallie Mae, you could refinance your student loans with another lender that has a better customer service reputation. You may also be eligible for a lower interest rate with a different lender, which could save you hundreds or even thousands in total interest.
When refinancing Sallie Mae loans, you dont have to worry about giving up special protections like you would with federal student loans. Sallie Mae loans are private loans, so there are fewer downsides to refinancing.
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Social Security Payments Garnished
Defaulting can adversely affect your retirement plan, at least for federal student loans.
Known as Social Security garnishment, the government can take up to 15% of your Social Security benefit. While this doesnt apply to private student loans, this is something you should definitely be aware of for federal student loans.
Note: Collection agencies are currently prohibited from garnishing Social Security benefits due to the COVID-19 student loan relief effort. This is in effect through at least September 30, 2021.
American Opportunity Tax Credit
The American Opportunity Tax Credit is available for the first four years of your college education. Its worth a maximum of $2,500 per student 100% of the first $2,000 of qualified education expenses and 25% of the next $2,000.
Eligible expenses include tuition, required enrollment fees, and required course materials.
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Sallie Mae Private Loan Issues
For starters, Sallie Maes private loans suffer from the same disadvantages that apply to all private lenders.
Even though the government loans may have a higher interest rate, Federal government loans are still a better alternative for most students, largely because the Federal loans have the most forgiving repayment plans. Therefore, students should first maximize FAFSA funds prior to selecting any private loan.
Borrowers should also be very careful about getting co-signers involved with their student loans. Sallie Mae claims that 88% of their borrowers have co-signers.
Sallie Mae recently took some heat from the government and in the press for the practice of auto-defaults. In cases where the co-signer dies or declares bankruptcy, Sallie Mae has the ability to automatically place the loan in default status. Sallie Mae does claim to have a cosigner release policy, but we have found these policies to not be of much use in real life. This is because lenders like Sallie Mae require the borrower to be independently creditworthy in addition to other requirements at the time of the cosigner release application. Because Sallie Mae has no incentive to actually release the cosigner from the loan, many are denied. We suggest that borrowers and cosigners never plan on a release. If they do want a release, this guide should help get it done with relative ease.
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Does Paying Off Student Loans Early Help Your Credit
If youre working on building your credit, you might be worried about the impact on your credit score paying off student loans early may have. But does paying off a loan early hurt your credit score?
You dont need to worry paying off your debt is a good thing. While your score might dip a little at first, your score will rebound. Changes in your credit score for paying off student loans early are usually temporary.
When you pay off a loan ahead of its scheduled end date, the lender will notify the credit bureaus that the loan was paid in full. Thats a big positive to lenders that review your credit report it shows that you honored your loan agreement and were able to pay it off. Eliminating your loans also improves your debt-to-income ratio or the amount of debt payments you have relative to your income. This will all help your credit profile in the long term.
However, one factor that affects your credit score is your credit mix it makes up 10% of your score. Lenders like to see that you have multiple types of credit, such as revolving accounts and installment loans.
If you dont have any other installment loans such as car loans or personal loans your score might drop slightly when you pay off your student loans because you dont have as strong of a credit mix.
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We Understand You Have Questions
Lets get you answers! Heres a crash course on undergraduate student loans, budgeting, and financial literacy.
What are the benefits of having a cosigner?
Most students dont have the credit history to take out a loan by themselves. Thats where a cosigner can help. A cosigner is an adult with good credit, usually a parent, who shares responsibility for the loan. By having a cosigner on the application, students chances of being approved may increase!
Whats the difference between a fixed and variable rate?
Fixed interest rateThe rate never varies. Youll have a predictable monthly payment amount.Variable interest rateThe rate can go up or down with changes to the loans index. It can save you money but could cost more, and your monthly payment amount may change.
Whats the difference between federal and private student loans?
Federal loans are provided by the government, while you take out a private loan from a bank like Sallie Mae, or a credit union. There are also differences in interest rates, repayment options, and other features.When you apply for a private loan, the lender must check your credit, including your borrowing/repayment history, to decide if you qualify for a loan. Many federal loans dont require a credit check.
How much should I borrow?
Consider other choices before private student loans
If You Have An Emergency Fund
Yes, paying off your student loans early is a good idea.
Before considering making extra payments toward your loans, its a good idea to have an emergency fund. An emergency fund is money set aside in a bank account to cover sudden crises, such as an unexpected car repair, job loss, or illness.
Having an emergency fund ensures you wont have to turn to credit cards when faced with a problem. But if you dont have an emergency fund yet, you should consider holding off on making extra payments on your loans and put that cash toward your savings first.
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