Student loans are second only to mortgages as the highest debt in America. And often it’s the biggest debt for those under 30 years old. Graduating college with $20,000 (or $40,000 or $100,000) in debt when your starting salary is only $30k a year? Daunting. All federal student loans have been under deferment, but that expires September 30, 2021. And payments will be due starting in October if you haven’t already put a solution in place. It’s time to take the reins. There are student loan repayment options and ways to find freedom. What is it that’s holding you back?
I’ve had temporary circumstances where I’ll be on reduced income for 3-6 months.
💡 Recommendation: Forbearance or deferment
Both these options push off the date you start payments (and therefore the date you complete payments). Depending on the type of loan, you may still accrue interest, so your balance could go up. That means it’s only a temporary fix, but can bridge the gap between jobs or a relocation.
I have an overwhelming amount of student loan debt, and I won’t be able to make the minimum payment in the foreseeable future – if ever.
💡 Recommendation: Income-driven plan
These plans set your payment as a percentage of your income, making it more manageable month to month. You do have to renew the plan and have them reassess the income and payment annually. Really low payments may not cover all the interest and principle, so any “leftover” balance at the end of the repayment period (usually 20 years) is forgiven.
My school closed down while I was taking online classes, and now I can’t finish my degree or get my credits transferred.
💡 Recommendation: Closed School Discharge
While not terribly common, students affected by a closed or defunct school often struggle with whether they still owe the loans. The good news is that it’s easy to request a review and see if you qualify for a discharge of the debt. The same is true if the school misrepresented their services (Borrower Defense Loan Discharge). Find out more regarding loan forgiveness and discharge here.
I’m paying my student loans, but the thought of doing that for 10 years, much less 20 to 30, sounds horrible.
💡 Recommendation: Pay extra – either more frequent payments, lump sum payments, or both
There’s rarely a downside to paying extra on student loans if you’re on a standard (not income-based) payment plan. You’ll be paid off faster and less out of pocket overall. Refinancing could be a helpful step if you have private loans with high interest; just remember that refinancing does NOT lower interest on federal student loans. Check out Nerd Wallet’s best tips for paying off loans early.