Student loan debt can seem overwhelming, whether you're a recent graduate, a not-so-recent graduate or the parent of a college student. Even if you have a solid budget and plan, it may feel like you're barely chipping away at that principal balance. There are options you may not have heard of that can help you get rid of student loan debt more quickly.
Look into loan forgiveness
Thanks to the Public Service Loan Forgiveness Program, you may be eligible to have your student loan balance forgiven entirely. This payment option is only available to those employed full-time by a local government agency, a tax-exempt not-for-profit or one of a number of not-for-profit public service organizations like law enforcement or libraries. It's important to note that this program is not automatic —it requires application and acceptance, is only available for Direct Loans and the forgiveness only happens after 120 separate, on-time monthly payments are made.
Make payments on the interest
If your loan payments have been deferred, or if you are in a grace period because you are still in school or recently graduated, go ahead and make monthly payments on the interest. Even if you aren’t making payments on your entire balance, interest continues to accrue and is added to your principal balance. That's called compounded interest —great for your savings but not so great when it comes to your debt Interest-only payments are more affordable, will keep your loans out of default and can help you pay less over the life of the loan.
Refinance your loans
For borrowers with excellent credit, there may be options to refinance your student loans at a lower interest rate. This can be especially helpful for private student loans or loans with very high interest rates. Be careful about refinancing a federal loan with a private loan, as federal loans come with protections and options (like the forgiveness program above) that are lost if the loan is refinanced with a private lender.
The most important thing to do to pay off your student loans faster is to take action today. Don't wait, or worse, ignore your loans for so long that they go into default. Even a small step that you take today can have a big impact tomorrow.