Student loan debt has become the fastest growing share of personal and consumer debt. Student loan debt surpassed 1.3 trillion dollars in 2017, having passed auto and credit card debt in 2013. The cost of servicing this debt is why millennials are delaying having children, getting married, or buying cards. Fortunately, student loan debt does not have to be an anchor around your neck and weigh down nearly every aspect of your life. Here are four easy ways to reduce student loan costs.
Sign Up for Auto-Pay
If you sign up for automatic withdrawal of your student loan payments from your bank account, you’ll typically receive an interest rate reduction of a quarter percent. This will reduce your student loan payment by $50 or more per month. Use the extra money as extra payments and you will pay off the loan several months faster. Then there’s the side benefit of never missing a payment and eliminating the extra fees and penalties that accrue if you were accidentally late making a loan payment.
Swap Out Student Loans for a Mortgage Loan
You have always had the option of swapping out student loan debt for mortgage debt since Sallie Mae doesn’t care who pays off the loans to her. Fannie Mae simplified this process for those with federally backed student loans, though it is also an option for those with PLUS loans and private student loan debt. One factor to consider is that it forgoes your right to use income-driven repayment programs or Public Service Loan Forgiveness.
Public Service
Public service student loan forgiveness may allow you to discharge your federally backed student loan debt after a set number of years working for the government or a non-profit. The Public Service Loan Forgiveness Program forgives the remaining balance after you’ve made twelve years of payments. It requires you to work full-time for a qualifying employer, but not all employers whether NGOs or non-profits qualify.
This is an excellent route for someone who has earned an online masters in criminal justice and is working for a police department, non-profit, or charity. You must fill out the appropriate employment certification form as soon as possible because it is receipt of this form not your starting date with a qualifying employer that starts the 120 monthly payment countdown. To ensure that you remain on track for this student loan forgiveness program, you should submit the form each year and submit it personally if you change employers.
This program was considered for termination by President Trump. However, his budget proposals do not end eligibility for current borrowers, but it may limit the ability of others to enroll in the program in the future.
Conclusion
Sign up for automatic payment of your student loan payments. If you refinance your home to pay off student loans, you could get a much lower interest rate. Public service could allow you to pay off your student loans from an online CJ degree in only ten years. Income-based repayment plans are an affordable option for those with personal financial hardship, though it brings the risk that your later high income or spouse’s income are used to over-pay what you’d have owed on a traditional repayment plan.
