Student loans are an enormous economic burden for Americans, coming in right behind mortgages as the largest kind of consumer debt. And although student debt is often used as a political talking point, you can rest assured that for now, your student loans aren’t going away.
There are, however, some ways you can reduce the burden of your student loan debt by pursuing better loan terms, shorter repayment periods or lower monthly payments. Here are 10 potential ways to improve your student debt scenario.
10 Tips To Reduce Student Loan Debt
#1. Ask For Employer Assistance
Government employers have long offered loan repayment assistance or tuition reimbursement programs. But more private companies are now initiating student loan assistance policies, in part to attract millennial talent.
If you’re hunting for a job, pay attention to the benefits offered by potential employers. Some offer student loan assistance as part of their benefits package. If you’re already employed, double check with your current employer on the possibility you’re missing out on a valuable policy.
#2. Consolidate Your Loans
Most federal student loans are eligible for consolidation, a process in which multiple student loans are combined into one loan. The interest rate is then calculated using a weighted average of the collective interest rates. While this won’t necessarily save you money on interest, it can simplify your repayment by consolidating them into one bill.
Consolidation could alter your monthly payments by changing your repayment period. Choosing a longer repayment period would lower your monthly payment but increase the overall amount of money you repay. Choosing a 10-year standard repayment plan would result in the highest possible monthly payment but minimizes the time and money required to pay off your loan.
You may also become eligible for alternative repayment plans and potential loan forgiveness that may have been unavailable before consolidation (more on those in a minute).
#3. Pay Ahead Of Time
Some federal student loans, like Perkins Loans, do not accrue interest while you’re enrolled in school and during the grace period after graduation. If you start making payments before interest kicks in, you can reduce the overall interest you’ll pay. And while it may be extremely difficult to do, paying the balance in full ahead of time will render your loan interest-free.
#4. Pay Extra
In the same vein, paying down the principle on your loan by paying extra each month will reduce your balance faster and save you money.
“I began a very aggressive savings fund to pay down my loans,” said Katrina McGhee, Life and Budget Coach at Katrina McGhee, LLC. “Pre-paying your principle on a loan is a great approach if you are able to make it work for you. Reducing your balance saves you a lot of interest in the long run.”
If you have multiple loans to pay, you may want to pay more money toward your higher-interest loans first to get them out of the way.
#5. Apply For Public Service Loan Forgiveness
If you work for a government organization or a qualifying not-for-profit, you may be eligible for public service loan forgiveness. You will have to be employed full time and have the right kind of loans and payment type. Under this program, your student loan will be forgiven after a certain amount of payments.