Top Advice For How To Get Help Paying Off Student Loans
You have options when it comes to getting help to pay off your student loans. Its important to find the right method of payoff assistance for your finances and lifestyle. Choosing the right method makes it easy for you to pursue it. For instance, if you like to volunteer, you can turn time donated into payment assistance with the right charity. If youre a great networker and fundraiser, crowdfunding is the one for you! Explore the possibilities below to determine the best option for you.
Do The Math And Find Your Payoff Date
Effectiveness level: Low
Do you know exactly when youll be free of student loan debt? If you answered no, youre not alone.
But figuring out your payoff date is always a good place to start when it comes to managing debt. Why? Because once you know this date, you can work on moving it closer.
The easiest way to figure this out: Use the National Student Loan Data System to view all of your federal loans and AnnualCreditReport.com to make a list of private loan lenders. Then, confirm payoff dates with your loan servicers.
How Long Will It Take Me To Pay Off My Student Loan: Usa
In the US, a student loan is treated more like a traditional bank loan. It requires regular repayments, whatever the circumstances. It will not be written off after a certain amount of time, so small repayments can feel stressful for the borrower, who is aware that the interest is constantly growing.
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Exceptions To The Rule
As with everything in life, there are a few exceptions to consider. For instance, you may be eligible for a hardship withdrawal. A hardship distribution does not allow you to take out money to repay your student loans but can be used if you have an immediate and heavy financial need.
According to the IRS, tuition to cover your educational fees and room and board expenses meet the immediate and heavy financial need burden. You also can use a hardship distribution to cover post-secondary education costs for your spouse, children, dependents or beneficiaries.
Again, a hardship distribution cannot be used to pay student loan debt that you already have incurred, but it can be used to pay tuition for the upcoming 12 months. Also, some retirement plans do not allow hardship distributions.
Pay More Than The Minimum Amount
If you have the means, pay more than what you owe each month. The more money you put toward your principal balance, the less youll pay in total interest over the life of the loan and the faster youll pay off your loans. If you do choose to make more than the minimum payment, let your lender know that the money is an extra payment or change your automatic payment option online. Otherwise, that money might be applied toward your next payment instead.
You should also indicate which exact loan should get the extra payment, so you can target the loans with the highest interest rate or lowest loan balance, depending on your goals.
Taking On A Side Hustle
Becky did get a job right out of college as a consultant. Her starting salary was $47,500a solid income for a new graduate. But because she wanted to pay off her debt as quickly as possible, Becky focused on boosting her income so she could make extra payments.
I got a part-time job as a public educator, she said. And I got into rewards points, mostly cashback rewards from credit cards and banks, to make more money.
In under two years, she was able to pay off approximately $68,000 of her high-interest loans. By paying off her loans early, she was able to save about $24,000 in interest charges.
Bc Loan Forgiveness Program
Students with specific essential occupations can get their British Columbia student loans forgiven if they agree to work for a publicly-funded facility in one of the provinces under-served areas or with children in an occupation that has a shortage of workers.
Are you struggling to make ends meet? Consider applying for BCs social assistance program.
If eligible, the BC Government will forgive the provincial portion of your Canada-B.C. integrated student loan at a maximum rate of 20% yearly for 5 years. Once you finish 5 years of qualified work, a percentage of your student loan will be forgiven, along with the interest generated during each year youre registered in the program.
Eligibility For The B.C. Loan Forgiveness Program
You can qualify for student loan forgiveness in BC if you:
- Are currently paying off a B.C. student loan
- Have graduated from an accredited post-secondary educational facility
- Are not enrolled in any full-time post-secondary studies
- Work an acceptable amount of in-person hours
- Are or will be employed in an eligible full-time, part-time, on-call and/or casual occupation at a publicly-funded facility and working with children or an under-served community
Eligible Occupations In Under-Served Communities In BC
- Teacher Educator
- Teach of the Visually Impaired or Deaf/Hard-of-Hearing
Do you live with a disability? Get extra financial aid through BCs disability assistance program.
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Take Advantage Of Interest Rate Discounts
An easy way to accelerate your student loan timeline is to utilize interest rate discounts that your loan servicer offers.
Federal loan servicers and some private lenders have automatic payment discounts, reducing your rate typically by around 0.25%. Some lenders offer additional loyalty discounts, further lowering your rate. These discounts help you save money and pay off your debt faster.
When Do You Start Paying On Your Loan
When you need to make payments varies based on the type of loans you have. Most federal loans have a six-month grace period after you graduate, leave school, or drop below half-time enrollment. Youre not required to make payments during the grace period, but in most cases, interest will accrue. You can choose to pay the interest that accrues during your grace period to avoid it being added to your principal balance.
Grad PLUS and Parent PLUS Loans do not have a grace period, but borrowers can choose to defer payments until six months after graduation.
For specific guidelines about repayment for Federal Perkins Loans, you should check with the school you received the loan from.
With the Coronavirus Aid, Relief, and Economic Security Act, all federal student loan payments were suspended, so your grace period may be longer than you initially expected. Currently, the federal student loan freeze is scheduled to end on January 31, 2022.
Whether your private loans have a grace period is dependent on your lender and the options you selected when you took out the loan. Many private loans do not have a grace period, so you may have to make payments while in school or immediately after graduation.
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Student Loan Payoff Calculator
Looking to pay off your student loans faster? With our Student Loan Payoff Calculator, you can see how quickly you can be student debt-free!
This calculator also serves as a student loan extra-payment calculator so you can see how long it will take to pay off your student loans by adding extra payments, refinancing your student loans, or doing both!
What Is A Traditional Student Loan Repayment Plan
Traditional repayment plans are based on the loans principal balance. Your principal balance is just the amount of money you borrowed to fund your education.
Traditional repayment options dont consider your income or family size when working out how much you will be paying every month.
Both traditional and income-driven repayment plans come with their own set of pros and cons including different repayment terms.
Traditional repayment plans include:
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If Youre Having Trouble Repaying
If you need help with repaying your Canada Student Loan, you may qualify for the Repayment Assistance Plan .
If youre having trouble repaying a provincial student loan, contact your student aid office. For repayment assistance with a loan or line of credit provided by your financial institution, contact your branch to determine what your options are.
Understand that by making your payments smaller, it will take you longer to pay back your loan. Youll end up paying more interest on your loan.
If you consider refinancing or consolidating your student loan, note that there are important disadvantages.
If you transfer your federal or provincial student loan to a private lender, you will lose any tax deductions on your student loan interest. You wont qualify for the interest free period while you’re in school and will end up paying more interest over time.
Realistic Ways To Pay Off Your Loans Early
If youre looking to get ahead, its possible to cut down the amount of time it takes to repay your student loans with a few simple strategies.
Pay off private loan interest in school
Students who take out private loans are subject to interest that accrues while theyre in school, during their grace period, and if they take deferments or forbearance. As such, private borrowers can get ahead by making monthly interest payments to keep their interest at a minimum and pay down their balance faster later.
Make extra payments
The simplest way to pay down your student loans fast is to make extra payments, or to pay more than the minimum amount.
That said, some student loan services may apply any excess to the next months payment, rather than paying down your principal. So, if you go this route, be sure to instruct your servicer to apply overpayments to your current balance.
Refinance your loan
If you have good credit and a steady source of income, you might be able to refinance your loan at a lower interest rate. In addition, if you have multiple loans, you can consolidate them into one loan at a single interest rate, with an opportunity to save money.
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Splurge On Your Student Loans Not Extras
Were not saying you dont deserve a treat or two every now and then, but prioritizing your loan will help you put a dent in what you owe, as well as interest. Commit to paying the minimum amount due on your student loan payments each month. If you can afford it, pay ahead to knock down those interest payments, too.
Decide Between The Debt Snowball And Debt Avalanche Methods
The debt snowball and debt avalanche are strategies for paying down your debt, assuming you decided not to consolidate or refinance your loans.
Under the debt snowball method, you pay off your debts in order of size, from smallest to largest. You make the minimum payment on all debts and allocate any extra principal payments to the loan with the smallest balance. Once you pay off that loan, you focus on the next-smallest balance, repeating this process until youre debt-free.
Under the debt avalanche method, you pay off your debts according to their interest rates highest to lowest. You make the minimum payments on all loans but direct any extra money to the loan with the highest interest rate.
The avalanche method is the most efficient way to pay off your student loans because it minimizes the cost of debt. However, many people find the frequent milestones of the debt snowball method more motivating.
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Pay Down High And Variable Interest Loans First
It can be easier and faster to pay off student loans if you make more than the minimum payment each month. If you have multiple college loans with different interest rates, some financial experts suggest paying more than the minimum payment on your highest and variable interest rate loans and making the minimum payment on loans with lower, fixed interest. This strategy can help eliminate or reduce your most expensive college loans faster and protect you from variable interest rates that can raise your monthly payments.
Evaluate Student Loan Repayment Options
How you repay your loans depends on three things: the type of loans you owe, how much you can afford to pay, and your money goals.
“Financial goals are different for everyone,” says Joseph DePaulo, CEO and co-founder of College Ave Student Loans. “Some may want a longer repayment plan that allows more flexibility in their monthly budget, while others may opt for a repayment plan that allows them to pay off their student loans as quickly as possible.”
There is a range of student loan repayment options to consider. If you need flexibility and you owe federal student loans, you might look at an income-driven repayment plan. There are several choices that calculate your monthly payment based on your income and household size and allow you more time to repay your loans than you’d get on a standard 10-year repayment plan.
On the other hand, if you want to repay your loans as quickly as possible, you might want to stick with a repayment plan that has the shortest term. The trade-off is that you’ll have a higher monthly payment. The best way to evaluate loan repayment options is to use a loan repayment calculator, such as the one offered by the Department of Education.
Income-driven repayment plans can offer loan forgiveness after a set number of years, but any forgiven loan balance may be treated as taxable income.
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Getting Donations To Pay Off Student Loans
Student debt can feel like a weight on your shoulders, but there are so many ways to get help paying off student loans. Weve included charities that pay off student loans and grants to help pay off student loans. If youre looking for a more modern way to get donations to pay off student loans, crowdfunding can be done right here on AngeLink! Start a fundraiser and start getting help to pay off student loans today
Average Monthly Student Loan Payment
In addition to how long it takes to pay off student loans, you may be wondering how much student loans average out to in monthly payments.
The average monthly student loan payment depends on the amount owed, the interest rate and the repayment schedule. All of these factors are included in the equation to determine a monthly student debt payment.
Currently, the average monthly student loan payment is around $393. Because this would be the minimum payment, youd have to pay more than this each month to make a real dent in your debt. Which, when the average college grad is making $50,000 a year as a starting salary, can be a pretty high ask on top of all of lifes other expenses.
This amount is based on a standard 10-year repayment schedule, but many loans will let you extend your repayment cycle by 20 or even 25 years to reduce your monthly financial burden.
But take note: the average amount of interest accrued on a 20-year payment schedule is $26,000 thats $26,000 ON TOP of your initial loan amount.
If you can afford a shorter repayment schedule and pay more than the minimum monthly balance, it will add up to significant savings on interest. Theres also refinancing your student loans, which can help you lower your monthly interest rate.
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See How Much You Could Save With Earnest
Student loan debt can seem insurmountable, but by making a plan and sticking to it, you can get on top of your debt and fast-track your journey to financial freedom.
As Beckys story illustrates, student loan refinancing can be an invaluable tool in reducing your interest rate and attacking your debt head-on1. When you refinance2 with Earnest, you can customize your loan term, release a cosigner, and sign up for automatic biweekly payments. On top of that, Earnest never charges fees for paying early or extra.
Try plugging your student loan amount and interest rates into Earnests free refinancing calculator to see how much you could save. Its quick, easy, and it wont impact your credit score.
Disclaimer: The opinions expressed by the interview subjects are not necessarily those of Earnest. This blog post provides personal finance educational information, and it is not intended to provide legal, financial, or tax advice.
1 Choosing to refinance to a longer term may lower your monthly payment, but increase the amount of interest you may pay. Choosing to refinance to a shorter term may increase your monthly payment, but lower the amount of interest you may pay. Review your loan documentation for total cost of your refinanced loan.
Earnest loans are serviced by Earnest Operations LLC with support from Navient Solutions LLC . Earnest LLC and its subsidiaries, including Earnest Operations LLC, are not sponsored by agencies of the United States of America.
Repaying Federal Student Loans
A federal student loan is student aid backed by the U.S. Department of Education. There are several types of federal student loans, including subsidized and unsubsidized loans.
The government pays interest on your behalf with a subsidized loan while your loans are in deferment, either an in-school deferment, economic hardship deferment or unemployment deferment.
With an unsubsidized loan, interest is not subsidized, so it will continue to accrue.
Repayment plans for federal student loans are divided into two main categories: traditional repayment plans and four different income-driven repayment plans, which are based on your household income and family size.
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