It’s true: student loan debt is considered one of the “best” kinds of debt because it signifies an investment in higher education and can have a positive impact on your tax burden and credit score. Nevertheless, being saddled with large monthly payments can limit your ability to achieve other financial goals such as starting a family, buying a home, or saving for retirement. In addition, paying interest on student loans over the long haul can be very expensive.
- Add small amounts of extra money to pay down your debt loan
Even small amounts above your monthly minimum can make a difference, as they go directly towards the principal of your loan. You can also decide ahead of time that any extra money or unexpected windfalls you get will go directly to your loan repayment, so you’re not tempted to spend it elsewhere. that inheritance from your great aunt on something you don’t need.
- Pursue Federal Student Loan Forgiveness
Federal student loan borrowers can pursue student loan forgiveness programs that dramatically reduce their loan obligation after meeting certain criteria.
Public Service Loan Forgiveness (PSLF), for instance, requires you to work full-time for a nonprofit or government organization while making 120 qualifying student loan payments. Once these requirements are met, you could be eligible to have your remaining loan balance forgiven, tax-free.
- Ask Your Employer About Repayment Assistance
Employer student loan assistance is growing in popularity as a workplace benefit. Taking advantage of this kind of program can be a good way to reduce your student loan debt — but be sure to talk to your employer to see what the requirements are and how the program works first.
“You’ll want to know if employer payments toward your student loan are considered taxable income to you,” says Patricia Roberts, CEO at Gift of College. “You’ll also want to know if the student loan has to have been taken for your own post-secondary education or whether it can be attributable to a child or grandchild for whom you borrowed funds.”
Tip: If your employer doesn’t offer student loan repayment assistance, it’s worth talking to your manager or a human resources representative to see if it’s a benefit that they’d be willing to provide. Be prepared to show how this can benefit the employer — for example, how it could be an incentive to attract and keep good employees.
You can also mention this benefit if you’re negotiating your salary with a new employer to see if it’s on the table.
- Advocate for Student Loan Reform
Groups like the Debt Collective have been organizing to reform the student loan system and release borrowers from predatory lenders. Contact your elected officials and make your voice heard.
- Refinance High-Interest Student Loan Debt
Refinancing student loans allows you to consolidate one or more existing loan balances into a new private student loan with a different interest rate and terms. Keep in mind that you’ll generally need good to excellent credit to be eligible for student loan refinancing.
Having good credit can also help you qualify for better terms — such as a lower interest rate — on a refinanced loan, which can make paying off student debt more manageable.
Keep in mind: Both federal and private student loans can be refinanced. However, refinancing federal loans means losing access to federal protections, such as income-driven repayment (IDR) and student loan forgiveness.