Paying Down Student Loan Debt

Student loan debt is a necessary evil if you were a student like me. No one sat me down and talked to me about interest rates, subsidized versus unsubsidized loans, compounding interest or anything like that. I had to learn the hard way. Being nearly $65,000 in debt seemed impossible for me to climb out of. It took research, asking questions, and not ignoring my growing debt to create a game plan that I’m sure will pay off in the long run (and even save me money). Hopefully these tools and resources will help you as well.

Loan Forgiveness. If you work in the public sector (non-profits for example) you may qualify for the Public Service Loan Forgiveness program. Certain jobs will allow you to make 120 qualifying monthly payments. To break things down a little that’s 10 years of on-time payments towards your student loans. Ten years may seem like a long time but when you have massive student loan debt that can shave off so much money in the long run. Employment certification is required but as long as you stay in this sector you should be fine. Visit here to download and complete the form. Teachers who are full-time and teach in a low-income school or educational service agency for five consecutive years have the opportunity of having $17,500 of their Direct Subsidized and Unsubsidized Loans and/or Subsidized and Unsubsidized Federal Stafford Loans forgiven. Click here to verify if you’re working in a low-income school that qualifies for forgiveness. If your school qualifies and you meet some other stipulations, download and complete the form by clicking here. As a teacher you have the benefit of using both programs as long as the loan forgiveness does not overlap (i.e. if you have a balance outside of the $17,500 Teacher Forgiveness Program, you can use the Public Service Forgiveness Program to pay down the rest of your debt).

Consolidate or refinance your loans. My loan provider is Nelnet. With them I have multiple small loans earning compounding interest. Try consolidating your student loans to have one large loan earning interest. This will save money on interest and will lessen the total amount you pay towards your overall debt. Consolidating works for federal loans and DOES NOT lower your interest rates. Refinancing combines federal and private loans and may provide you with a lower interest rate. With refinancing your loans through a private lender, you have the options of gaining a fixed or variable interest rate which will depend on your credit worthiness. Payment plans also differ depending on whether you’re consolidating or refinancing. When consolidating loans, you choose standard options or income-driven repayment plans. You can select 10, 20, or 25-year terms and after your term is up your loans will be forgiven. Refinancing will give you shorter terms but also higher monthly payments.

Live like no one else now so you can live like no one else later. -Dave Ramsey

Get serious about cutting back. Tackling student loan debt is just like tackling any other debt. Use different debt reduction strategies and methods. If consolidating or refinancing isn’t for you work on paying each individual loan down by higher/lower interest rate or highest/lowest balance. Try the snowball or avalanche methods. Get a side hustle and use the income strictly towards student loan debt reduction. Even though we’re young and we want to live our best lives, sacrifice has to come into play when we’re making financial decisions that contribute to our overall financial well-being. Forgo Starbucks one day per week and see how that adds up. Forgo the girls’ trip and put the money towards your student loans instead. Cutting your expenses and increasing the amount of money towards your debt will pay off in a major way.

Understand your debt. Use a loan calculator to understand exactly how much you owe and how your interest affects you in repaying your debt. Most online accounts have calculators but you can also use one from Fin Aid which also provides various resources on managing and paying down student loan debt. A key component to paying down any debt is to understand how interest works and how best to save money on interest charges for the life of your loan. It may seem like a better deal to extend your loan but always note it will cost you in the long run. If you can fork up more money upfront to pay your debt down quicker, you’ll save more money and get out of debt sooner. See the chart below:

Ladies it’s not impossible. Anything worth having is worth fighting for. Create a plan that is specific to your needs and goals and STICK TO IT. Please don’t make the mistakes I made by ignoring your student loan debt thinking it will go away because it won’t. If you go bankrupt, student loan debt will still be there. Student loans can affect you because wages or tax refunds can be garnished in order to repay your debt. It’s not easy but it is doable and face it sis - we can do it! Let me know if there are any questions in the comments below!

-Chantelle