Student loans can place a heavy burden upon your shoulders, hurting your ability to pursue your financial goals. In fact, a recent study found that millennial households with student loan debt have an average net worth of just $29,087, while those without loans have an average net worth of $114,376.
Getting out of debt can be hard. When you’re living paycheck to paycheck, it can feel like you’ll never make progress with your loans.
But it doesn’t have to be that way. If you’re willing to be a little creative, you can cut down your debt much faster.
6 student loan management tips
If you’re only able to afford the minimum payments on your student loans, it can take years to repay your loans. And, you’ll pay thousands more than you originally borrowed in interest charges.
Luckily, there are ways to accelerate your student loan repayment that don’t require you to live on just rice and beans.
- Consider a career in public service
- Get your employer to foot the bill
- Pick jobs that are in demand and
that will help you pay down your debt
- Move somewhere cheaper
- Take advantage at tax time
- Refinance your loans
If you have student loan debt and are interested in serving others, consider working for a government agency or nonprofit organization. Not only will your work positively impact people’s lives, but you could also qualify for Public Service Loan Forgiveness.
Through this program, your federal student loans could be forgiven after you work for 10 years at a qualifying organization and make 120 qualifying payments on your loans. The remaining balance could then be discharged, tax-free.
More and more employers are recognizing the impact that student loans have on their young employees, especially when it comes to productivity. To recruit and retain top talent, companies are adding student loan reimbursement as part of their benefit packages.
According to Goodly — a service that handles student loan benefits for employers — these programs can be impactful. Employees who receive student loan reimbursement can reduce their payment periods by 30%.
Talk to your human resources department to see if this benefit is offered and how to enroll. If it’s not part of your current benefits package, ask your company to consider adding it as a perk.
If you’re in an industry that is facing professional shortages, such as teaching or health care, you may be able to qualify for student loan repayment assistance. Several states offer special programs to attract talented individuals in high-need areas. In return for a service commitment, they’ll repay some or all of your student loans.
We’ve identified over 120 student loan repayment assistance programs that may be able to help you with your debt.
Rent is one of the biggest expenses you have in your post-college life. But while it may seem tempting to spend your paycheck on a big place of your own, living frugally and somewhere affordable is the best way to save money — money that could be directed to paying off your student loans. Consider getting a roommate or downsizing to a smaller unit to free up more room in your budget.
The savings can have a big impact on your student loan balance. For example, let’s say you rented an apartment for $1,000 a month. You also have $35,000 in student loans at a 6.6% interest rate and a minimum monthly payment of $400. It would take you 10 years to repay your loans, and you’d repay $12,864 in interest.
But pretend you got a roommate to split your housing costs, cutting your living expenses by $500. If you put that extra $500 per month toward your loan, you’d repay your loans in under four years. And you’d repay just $4,489 in interest. Getting a roommate would help you save over $8,000.
Find out how much you can save with our prepayment calculator.
When you start paying back your student loans, you also pay interest on the debt. While those interest charges can be painful, they can help you qualify for federal tax breaks during tax season.
If you made payments on your student loans, you can deduct the interest you repaid in your taxes, up to $2,500. The student loan interest tax deduction can lower your tax bill by up to $625, helping you keep more money in your bank account.
If your student loans have a high interest rate, you could be paying thousands more than you originally borrowed in interest charges. With so much of your monthly payment going toward interest, it can be hard to make progress paying down your loans.
If you’re wondering how to manage student loans and fix this problem, one option to consider is student loan refinancing. With this approach, you take out a loan from a private lender and use it to pay off your old loans. The new loan has different repayment terms, including interest rate and monthly payment.
If you qualify for a lower interest rate, the savings can be significant. For example, pretend you had $35,000 in student loans at a 6.6% interest rate with 10 years left in your repayment term. Over the course of your repayment period, you’d pay $47,904 — interest charges would cost you nearly $13,000.
But let’s say you refinanced your debt and qualified for a 10-year loan at a 4% interest rate. Your monthly payments would go down, plus you’d save money over the length of your loan. You’d repay a total of just $42,523. By taking a few minutes to refinance your loans, you’d save over $5,000.
|Original Loan||Refinanced Loan|
|Loan term||10 years||10 years|
Use our student loan refinancing calculator to find out how much you could save.
Refinancing does have some downsides — especially if you have federal student loans —once you refinance, you permanently lose access to the various federal aid programs, such as income-driven repayment plans and Public Service Loan Forgiveness. But for some borrowers, it can be a great tool for managing your student loans.
Tackling your student loans
If you’re struggling with student loan debt, you know how difficult repaying them can be. But by using the above student loan management strategies, you can tackle your debt, save money and get out of debt faster.
Stephanie Halligan contributed to this article.
Interested in refinancing student loans?Here are the top 6 lenders of 2020!
|Lender||Variable APR||Eligible Degrees|
|1.89% – 6.66%1||Undergrad & Graduate|
|1.89% – 5.90%2||Undergrad & Graduate|
|2.25% – 6.09%3||Undergrad & Graduate|
|1.99% – 5.64%4||Undergrad & Graduate|
|1.98% – 8.55%5||Undergrad & Graduate|
|2.39% – 6.01%||Undergrad |
|Check out the testimonials and our in-depth reviews! |
1 Important Disclosures for Splash Financial.
Splash Financial Disclosures
Terms and Conditions apply. Splash reserves the right to modify or discontinue products and benefits at any time without notice. Rates and terms are also subject to change at any time without notice. Offers are subject to credit approval. To qualify, a borrower must be a U.S. citizen or permanent resident in an eligible state and meet applicable underwriting requirements. Not all borrowers receive the lowest rate. Lowest rates are reserved for the highest qualified borrowers. If approved, your actual rate will be within a range of rates and will depend on a variety of factors, including term of loan, a responsible financial history, income and other factors. Refinancing or consolidating private and federal student loans may not be the right decision for everyone. Federal loans carry special benefits not available for loans made through Splash Financial, for example, public service loan forgiveness and economic hardship programs, fee waivers and rebates on the principal, which may not be accessible to you after you refinance. The rates displayed may include a 0.25% autopay discount.
The information you provide to us is an inquiry to determine whether we or our lenders can make a loan offer that meets your needs. If we or any of our lending partners has an available loan offer for you, you will be invited to submit a loan application to the lender for its review. We do not guarantee that you will receive any loan offers or that your loan application will be approved. Offers are subject to credit approval and are available only to U.S. citizens or permanent residents who meet applicable underwriting requirements. Not all borrowers will receive the lowest rates, which are available to the most qualified borrowers. Participating lenders, rates and terms are subject to change at any time without notice.
To check the rates and terms you qualify for, Splash Financial conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, the lender will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.
Splash Financial and our lending partners reserve the right to modify or discontinue products and benefits at any time without notice. To qualify, a borrower must be a U.S. citizen and meet our lending partner’s underwriting requirements. Lowest rates are reserved for the highest qualified borrowers. This information is current as of October 1, 2020.
2 Important Disclosures for Laurel Road.
Laurel Road Disclosures
All credit products are subject to credit approval.
Laurel Road began originating student loans in 2013 and has since helped thousands of professionals with undergraduate and postgraduate degrees consolidate and refinance more than $4 billion in federal and private school loans. Laurel Road also offers a suite of online graduate school loan products and personal loans that help simplify lending through customized technology and personalized service. In April 2019, Laurel Road was acquired by KeyBank, one of the nation’s largest bank-based financial services companies. Laurel Road is a brand of KeyBank National Association offering online lending products in all 50 U.S. states, Washington, D.C., and Puerto Rico. All loans are provided by KeyBank National Association, a nationally chartered bank. Member FDIC. For more information, visit www.laurelroad.com.
As used throughout these Terms & Conditions, the term “Lender” refers to KeyBank National Association and its affiliates, agents, guaranty insurers, investors, assigns, and successors in interest.
Assumptions: Repayment examples above assume a loan amount of $10,000 with repayment beginning immediately following disbursement. Repayment examples do not include the 0.25% AutoPay Discount.
Annual Percentage Rate (“APR”): This term represents the actual cost of financing to the borrower over the life of the loan expressed as a yearly rate.
Interest Rate: A simple annual rate that is applied to an unpaid balance.
Variable Rates: The current index for variable rate loans is derived from the one-month London Interbank Offered Rate (“LIBOR”) and changes in the LIBOR index may cause your monthly payment to increase. Borrowers who take out a term of 5, 7, or 10 years will have a maximum interest rate of 9%, those who take out a 15 or 20-year variable loan will have a maximum interest rate of 10%.
KEYBANK NATIONAL ASSOCIATION RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE.
This information is current as of September 9, 2020. Information and rates are subject to change without notice.
3 Important Disclosures for SoFi.
4 Important Disclosures for Earnest.
To qualify, you must be a U.S. citizen or possess a 10-year (non-conditional) Permanent Resident Card, reside in a state Earnest lends in, and satisfy our minimum eligibility criteria. You may find more information on loan eligibility here: https://www.earnest.com/eligibility. Not all applicants will be approved for a loan, and not all applicants will qualify for the lowest rate. Approval and interest rate depend on the review of a complete application.
Earnest fixed rate loan rates range from 2.98% APR (with Auto Pay) to 5.79% APR (with Auto Pay). Variable rate loan rates range from 1.99% APR (with Auto Pay) to 5.64% APR (with Auto Pay). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 8.95% for loan terms 10 years or less. For loan terms of 10 years to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95% (the maximum rates for these loans). Earnest variable interest rate loans are based on a publicly available index, the one month London Interbank Offered Rate (LIBOR). Your rate will be calculated each month by adding a margin between 1.82% and 5.50% to the one month LIBOR. The rate will not increase more than once per month. Earnest rate ranges are current as of July 31, 2020, and are subject to change based on market conditions and borrower eligibility.
Auto Pay discount: If you make monthly principal and interest payments by an automatic, monthly deduction from a savings or checking account, your rate will be reduced by one quarter of one percent (0.25%) for so long as you continue to make automatic, electronic monthly payments. This benefit is suspended during periods of deferment and forbearance.
The information provided on this page is updated as of 7/31/2020. Earnest reserves the right to change, pause, or terminate product offerings at any time without notice. Earnest loans are originated by Earnest Operations LLC. California Finance Lender License 6054788. NMLS # 1204917. Earnest Operations LLC is located at 302 2nd Street, Suite 401N, San Francisco, CA 94107. Terms and Conditions apply. Visit https://www.earnest.com/terms-of-service, email us at [email protected], or call 888-601-2801 for more information on our student loan refinance product.
© 2020 Earnest LLC. All rights reserved. Earnest LLC and its subsidiaries, including Earnest Operations LLC, are not sponsored by or agencies of the United States of America.
5 Important Disclosures for LendKey.
Refinancing via LendKey.com is only available for applicants with qualified private education loans from an eligible institution. Loans that were used for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not eligible for refinancing with a lender via LendKey.com. If you currently have any of these exam preparation loans, you should not include them in an application to refinance your student loans on this website. Applicants must be either U.S. citizens or Permanent Residents in an eligible state to qualify for a loan. Certain membership requirements (including the opening of a share account and any applicable association fees in connection with membership) may apply in the event that an applicant wishes to accept a loan offer from a credit union lender. Lenders participating on LendKey.com reserve the right to modify or discontinue the products, terms, and benefits offered on this website at any time without notice. LendKey Technologies, Inc. is not affiliated with, nor does it endorse, any educational institution.
Subject to floor rate and may require the automatic payments be made from a checking or savings account with the lender. The rate reduction will be removed and the rate will be increased by 0.25% upon any cancellation or failed collection attempt of the automatic payment and will be suspended during any period of deferment or forbearance. As a result, during the forbearance or suspension period, and/or if the automatic payment is canceled, any increase will take the form of higher payments. The lowest advertised variable APR is only available for loan terms of 5 years and is reserved for applicants with FICO scores of at least 810.
As of 10/15/2020 student loan refinancing rates range from 1.98% APR to 8.55% Variable APR with AutoPay and 2.99% APR to 8.77% Fixed APR with AutoPay.