If college were a party, then student loans are the hangover. Unfortunately, there is no quick fix for this headache, but here are five ideas for managing your student loan debt.
Income-Driven Repayment Programs — There are four different types of income-driven repayment choices that may help to manage your monthly federal student loan payments.1 You may be eligible for one or more of these payment choices depending on the types of student loans you have, your family size, your income, and other factors. Under these plans, any remaining loan balance may be forgiven at the end of the adjusted payment period.
Public Service Loan Forgiveness — Certain federal loans may be forgiven after 10 years of qualifying payments if you take a job with federal, state, or local government; a non-profit; or certain other public service organizations.
National Service Programs — There are several programs, such as AmeriCorps, Peace Corps, and the military, in which service may accrue a benefit that reduces an outstanding loan balance in an amount that varies depending upon the program.
Pre-Pay Principal — Pre-payment of principal may help lower the lifetime interest costs of a loan. To raise cash to fund pre-payments, one idea is to ask that birthday and holiday gifts be cash to put toward pre-payments. You could also direct any raises, bonuses or overtime pay to pre-payments. If you do pre-pay principal, be sure to target the loans with the highest rate of interest.
Loan Consolidation — You can consolidate your federal loans through the Direct Loan Program, or through a private lender if you have private loans. However, this may only make sense if you can obtain an overall lower interest rate. Also note that fees and longer interest repayment periods could take you back to that hangover.
A financial professional may help you to determine which of these options might best fit your situation.
- StudentAid.gov, December 2020
The programs above are for informational purposes only and should not be considered a substitute for a more comprehensive student loan evaluation.
Information in this material is for general information only and not intended as investment, tax or legal advice. Please consult the appropriate professionals for specific information regarding your individual situation prior to making any financial decision.
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