For many American families, student loan debt hangs over your heads like a cloud on an otherwise sunny day, especially for those who couldn’t save enough before attending college. Taking out loans is often necessary to get your degree — but paying back that debt can be an incredible burden, particularly when you are starting a family and trying to get ahead in life.
So how can you get in front of your student loans in order to move forward with your life, debt-free? There are many strategies that you can take so that you can pay off your loans more quickly — and put the focus back on things that are truly important to you, like your retirement, buying a house, or even saving for your kids’ college.
Explore Student Loan Refinancing and Refinancing
If you have private student loans, refinancing may be a smart choice as a way to lower your monthly payments and get out of debt more quickly. When you refinance your student loans, you are essentially taking out a new loan to pay off your old loans. If you qualify for this loan, you will get a new, lower interest rate, which can save you a significant amount of money. It can also help you change from a variable interest rate to a fixed interest rate on your loans.
Refinancing is available for anyone with private student loans who meets the eligibility criteria. Generally, you must have a credit score of at least 660, have a stable income, and have made your student loan payments in full and on time. You can refinance your federal student loans along with your private student loans, but will lose the advantages of federal student loans if you do, so carefully consider the wisdom of consolidating federal student loans before making this decision. Refinancing usually results in a shorter loan term, which means that you will ultimatelypay less in interest and can pay off your loan more quickly.
If you decide to refinance your student loans, you can compare options online. Refinancing canbe done directly through private lenders without a fee. Never respond to emails, phone calls or pop-up ads about refinancing; these are usually scams that will charge you to refinance. Instead, go directly to your chosen lender to start the application process. Once you are approved, you will be able to pay off your loan sooner — and then devote that money towards your other financial goals.
Look into Employer Student Loan Payment Benefits
In 2017, more employers than ever are offering student loan payments as an employee benefit. While it is still a relatively rare type of benefit, the idea is picking up steam — and it won’t hurt toask your employer if they would be willing to offer this program at your workplace.
The way it works is simple. The company gives employees with student loans a small amount each month, usually $100 to $200, towards the student loans. This money is sent directly to thestudent loan servicer. Because this money is in addition to the regular student loan payments made by the employee, it can help the employee pay down the student loans more quickly — and get out of debt faster. If your employee is willing to offer this type of benefit, it can be a huge help for you as you navigate your student loan repayment.
Try the Avalanche Strategy
If you are serious about getting out of debt, one of the best ways to do so is through the avalanche strategy. This plan is straightforward: you tackle your debt by paying off the one withthe highest interest rate first, and then move on to the one with the next highest interest rate, and so on until you’ve paid off all of your debt. While it may take a while to pay off your student loan with the highest interest rate, the benefit of this strategy is that once you have knocked off that high interest rate student loan, the avalanche begins — because you can put the extra money that you were paying towards the highest student loan to the next debt, it becomes that much easier to pay off the next debt. If you are serious about paying off your student loans as quickly as possible — and saving the most money while doing so — then the avalanche strategy is the best way to do it.
It can be challenging to pay off your student loans while starting a family and saving for the future. But by taking control of your debt, you can say goodbye to those loans — and start working on your other financial goals.