Guest Post – 6 Different Ways to Pay Off Your Student Loans
By – Maricel Tabalba
Fortunately, there are options available that may offer relief. If you’re a member of one of these debt-laden classes, consider exploring some of the following strategies to help you manage your student loans.
Seek out Employer Student Loan Repayment
When it comes to recruiting and keeping fresh talent, employers are always searching for new ways to appeal and stay competitive. Offering a larger salary is the standard option, but many small and mid-sized companies simply cannot afford to compete in this regard. Instead, employers are increasingly turning to outside-the-box solutions, including benefits that include student loan repayment. This practice is especially common in medicine, technology, finance and other fields that require specialized degrees. If you’re willing to take a bit less in yearly salary, it’s worth inquiring about student loan repayment during negotiations with your current or prospective employer.
Use Automatic Deductions
Keeping track of your loan payments and making them on time each month can be a hassle, especially if you have multiple loans to manage. To make the process simpler, most lenders offer an option to sign up for automatic monthly deductions. This helps to streamline your payments and avoid missing a deadline, but it also comes with another benefit you may not have realized.
All government loans offer a slight reduction in interest rates – typically 0.25 percent – for enrolling in automatic deductions, and certain private lenders do the same. While it may not seem like much, the savings could end up shaving at least a full year off your repayment schedule.
Consider Your Employment Options
Your ability to repay your student loans depends heavily on your earning power, so it makes sense to consider whether you can increase your earnings. If it works with your schedule, taking on a second job may be a great way to get ahead of schedule and start paying down your debts more quickly. In fact, some people choose to take on a part-time job and use those earnings exclusively for loan repayment.
If you can’t find the time for another job, you may still be able to earn extra cash in other ways. Whether it’s driving for a ride-sharing platform, turning a hobby into a moneymaking side venture or even searching for a new primary job with a higher salary, it pays to leave no stone unturned in your effort to increase your earning power.
Find the Right Repayment Plan
When you begin to repay your student loans, you’ll be greeted with a number of plans to choose from. Even if you’ve already been placed on a repayment plan, you can switch to another plan at any time without incurring any additional charges. Common plans include a standard 10-year plan, an extended 25-year plan, a graduated plan in which you pay progressively more as time goes on and various income-based or pay-as-you-earn plans. The best option depends on your specific financial situation, and your needs may change over time. Use a repayment estimator to review which options may be available to you and calculate how much you’ll have to pay with each plan.
Consolidate Your Loans
Consolidation used to be one of the most powerful tools available for managing student loan debts. Now that all federal loans carry fixed interest rates, the financial incentive for most people has disappeared. Nonetheless, consolidating your student loans into one monthly payment can make it easier to stay on top of your debt and avoid missed payments, and it’s possible you may be able to save some money on interest payments. Variable-rate private loans are rarely able to be consolidated, but it’s still an option worth exploring.
Explore Loan Forgiveness, Cancellation or Discharge
Wouldn’t it be nice if you could simply wave a magic wand and make your student debt disappear? That may lie in the realm of fantasy, but you may be eligible for the next best thing under certain circumstances. Entering a public service-oriented field, such as teaching, law enforcement, social service, military or nursing, may qualify you for forgiveness of all or part of your student debt. If you become disabled or if your school closes, your debt could be canceled in its entirety. In certain cases, bankruptcy or other financial difficulties may also qualify you for a loan discharge. While these options are unlikely to be available to most people, it’s important to do your due diligence nonetheless.
Student debt can be a tremendous burden, especially for recent college graduates. The principal alone is a challenge to manage, and interest only makes things worse. Following the tips above, however, you may be able to pay off your debts more quickly than expected – and save some money in the process.
Maricel Tabalba is a freelance contributor for Credit.com who is interested in writing about personal finance advice for Millennials and college students. She earned her Bachelor of Arts in English with a minor in Communication from the University of Illinois at Chicago.