iQuanti: For many people carrying student loan debt, the present moment can be a confusing time to think about a repayment strategy. During the height of the COVID-19 pandemic, changes to federal loan servicers and a repayment pause that was extended several times created some uncertainty. Eventually, student loan repayments will resume, and borrowers will be required to pay once again. Below are a few ways to maximize your student loan repayment strategy.
Take Advantage of Loan Forgiveness
Student loan forgiveness means you may not be required to repay all or some of your federal student loans. Here are a few ways you may qualify for loan forgiveness.
Examples of Student Loan Forgiveness Options:
- The Biden Administration's Student Loan Debt Relief Plan — While details about the Biden Administration's plan are still being released, we encourage readers to check the government's website for qualifications and eligibility. What we know now is that the plan includes loan forgiveness of up to $20,000 and you have until Dec. 31, 2023, to apply.
- Public Service Loan Forgiveness (PSLF) — If you work full-time for a qualifying not-for-profit or government organization, you may be able to receive loan forgiveness under the PSLF program, which erases the remaining loan balance once you've made 120 qualifying monthly payments.
- Income-Driven Repayment (IDR) Plan Request — IDR plans can provide a lower monthly repayment plan. However, the borrower must recertify their income each year to remain enrolled.
- Teacher Loan Forgiveness — Full-time teachers who have worked in a low-income school or educational agency for five consecutive years may be eligible for forgiveness of up to $17,500.
Pay Off Your Student Loans Faster
Many graduates are paying off hefty student loans after they graduate while struggling to pay their regular bills or reach financial goals like saving up for a down payment on a home.
Key Ways to Pay Your Student Loan Faster:
Start Paying Immediately — You may be able to start making payments during your grace period, even if they're small payment amounts. A grace period for student loans is a stretch of time, after you've graduated or left school, when you're not required to make payments. Most student loans have a six-month grace period, although please check with your lender for details specific to your loans. So, if you have income from a part-time job during college and you can fit it into your budget, you may be able to cover the accruing monthly interest by making monthly payments immediately.
- Pay More Than Your Monthly Minimum — Paying a little more than your monthly payment each month may help lower the total cost of your loan by reducing the interest or number of payments you will have to make over the life of the loan.
- Use "Surprise Money" — Do you get a holiday bonus at work or when you hit a performance goal? Did a family member gift you money for a birthday, graduation or other milestone? This money can include your tax refund or an unexpected inheritance. Consider allocating these "surprise" extra funds to your student loan.
Refinance Student Loans
If paying off your student loan feels so daunting that you don't know how to start, you might need to look at your monthly budget. Refinancing higher interest rate student loans may go a long way to help you manage your student loans with a lower rate.
Key Reasons to Refinance Student Loans:
You Have Private Student Loans — Refinancing private student loans can get you a lower interest rate and more attractive loan terms that can result in significant savings. Note that if you refinance federal student loans with a private lender, you will lose access to federal programs, such as income-driven repayment, federal forbearance, and any other benefits offered to federal borrowers.
You Want to Boost Your Savings — Even if you don't have the best credit, student loan refinancing may still be possible with the chance to save by snagging a better rate. Your lender may even offer a student loan refinancing bonus.
You Have a Loan With Variable Rates — It can be challenging to predict how much you will have to repay every month with a variable rate loan, and even then, variable rates can be more expensive to repay over time if interest rates rise. So, it could be wise to lock in a fixed rate for more reliability and peace of mind.
Although student loans may be challenging to manage at times, the benefits of obtaining a higher education academic degree can ensure you're building a bright future. With the right strategy, you can still maximize your student loan savings opportunities to help you reach your future financial goals.
Senior Public Relations Specialist
Press Release Service by Newswire.com
Original Source: How to Get the Most Out of Student Loan Payments