As an independent, transparent marketplace for student loans, Credible helps borrowers understand all of their student loan repayment options.
Student loan repayments are burdensome no matter your financial situation. Those currently in repayment often opt into automatic payments to make life easier and to take advantage of a rate reduction. Although this passive option provides some student loan relief, there are options that could potentially save you a lot of money and shave a few years off of your repayment terms. Actively reviewing your loans and understanding ways to save can lead to years of student loan relief.
Why should I seek student loan relief?
Just because you are making your monthly payments on time and are staying out of default doesn’t mean you shouldn’t seek relief options. No one likes overpaying! If you borrowed when interest rates were high, that does not mean you should be stuck with those rates. Instead, it is worth looking into the numerous professional forgiveness options that can significantly reduce your student debt.
There are a few ways to find relief while repaying your student loans. Let’s look at some questions you may want answered.
How can I shorten my repayment?
While you have your automatic payments set up, go one step further and think about how you can shorten your repayment.
- Prepaying: After you decide how much more you can put towards your student loans, use an online calculator to see how many years you can save by prepaying on your student loans Tip: If you have several loans, delegate your prepayment to your higher interest rate loans to pay those off faster.
- Investing: Think about how your interest rates on your student loans compare to a return on an investment. If you think you can get a higher return by investing instead of paying off your student loans it may be wise to invest; many celebrities with student loans have done this with their student debt!
How can I adjust my interest rate?
Many believe that they are stuck with the interest rates they have on their student loans, but this simply isn’t true. Now that you have work history and improved credit since graduation, private lenders are willing to offer you new rates for your student loans. Student loan refinancing is an emerging option to help lower your interest rate and change your loan term. Rates are currently at market lows, some under 2%, which is another signal to consider refinancing. If you are not actively reviewing your loans, waiting a year could create a wasted opportunity to lower your rate and get student loan relief.
When should I talk to my servicer?
You may not be inclined to talk to your servicer if you have had a bad experience in the past, but understanding your loan options is a difficult and time-consuming process that can be simplified and answered over the phone. If you are struggling to make payments and need student debt relief, talk to your servicer about your options. Here are some options you may be able to take advantage of:
- Deferment/Forbearance: Many servicers offer these options for financial hardship or if you wish to return to school and are worried about your student loans. Depending on why you defer, you may be eligible for a couple years of deferment. Keep in mind that interest may still accrue during this time.
- Income-driven Repayment: If you have federal loans, opting into an income-driven repayment plan. Although these programs will help you make your monthly payments, your loan terms will be extended. If you opt into one of these plans, understand some of the consequences so you can manage accordingly.
Have I explored all forgiveness options?
Some employers offer student loan repayment assistance to their employees. If your company does not offer such benefits and you have a sizable amount of debt to pay back, a public service forgiveness program might be helpful. Although salaries do not pay as high in the private sector, these programs can reduce your debt load by thousands of dollars in several years.
There is a general ten-year Public Service Loan Forgiveness option for federal loans, however there are state and profession specific programs that offer yearly debt forgiveness. These programs are designed to recruit employment into underserved areas and in just a couple years your debt could be forgiven. Check out these profession-based forgiveness guides that can potentially provide some debt relief.
If you are unsure if you interest rates are too high and want to explore your refinancing options, visit Credible.