Students and families invest heavily in higher education. Many students rely on student loans to finance their educations. In fact, students amassed $1.56 trillion in student loan debt by 2020.
According to Forbes, American student loan debt is now the second highest consumer debt category, exceeded only by mortgage debt. The Institute for College Access and Success says the average student loan debt is $32,731, while the median student loan monthly payment is $222.
Some students feel like paying off student loan debt is impossible. Many loan repayment schedules kick in shortly after graduation, and certain borrowers may not yet be making enough money to afford even the minimum payments on their student loans. There are ways, however, to get out from under student loan pressure.
Investigate income-driven repayment
IDR will lower student loan payments based on your income, and some plans even promise to forgive any remaining balance once the repayment period is up. That period can take between 20 and 25 years.
Make a move
The Rural Opportunity Zone program encourages Americans to move to rural areas to help discourage population decline and to give others the benefits of a lower cost of living. Check with rd.usda.gov for more information.
Work in public service
A Public Service Loan Forgiveness program, or PLSF, enables student loan forgiveness in exchange for working for a nonprofit or working in government.
Refinance the loans
Graduates may not be aware that they can refinance their student loans at a lower rate or choose new loanterms, including variable or fixed rates. Maturity dates can even be renegotiated in certain instances. It’s possible to save thousands of dollars in interest by refinancing, particularly if borrowers have a credit score of at least 650.
Make more than the minimum payment
Financial advisor Dave Ramsey says making the minimum payments on student loans will not get them paid
off fast, and the interest could pile
up as well. By paying more than the
minimum payments, you can pay down
the principal more quickly. Designate
tax refunds and salary increases to pay
down student loan debt.
Ask for help
Speak with your boss about whether
he or she can help pay off student loans.
Some employers offer conditional
student loan repayment to employees.
These are some of the ways that
student loan debts can be repaid
quickly, efficiently and creatively.