Want to pay off your student loans? Design the perfect repayment plan for your needs, improve your financial position, and reach all your financial goals \u2014 with or without government relief.<\/p>\n\n\n\n
This quick guide will help you figure out your best student loan repayment plan by answering just 5 questions.<\/p>\n\n\n\n
Student loans<\/a> come in two flavors: federal student loans and private student loans.<\/p>\n\n\n\n Federal student loans are provided through the federal government. Your eligibility is determined by filling out a FAFSA every year: a Free Application for Federal Student Aid<\/a>.<\/p>\n\n\n\n If you have a federal student loan, there\u2019s a chance it may qualify for a student loan forgiveness program that could wipe your debt clean, but only if you and your loan can check all the right boxes.<\/p>\n\n\n\n If you think you might qualify, visit the official government website<\/a> from the U.S. Department of Education to learn more.<\/p>\n\n\n\n Also, note that the Public Service Loan Forgiveness program made it easier to qualify for loan forgiveness as of October 6, 2021, but only for a limited time. Visit the official PSLF Waiver page<\/a> to learn about those changes.<\/p>\n\n\n\n Private loans, on the other hand, are loans from private lenders like banks or other financial institutions. This kind of student loan debt isn\u2019t funded by the government, so it doesn\u2019t qualify for the government\u2019s loan forgiveness programs.<\/p>\n\n\n\n As a result of the CARES Act, passed in March of 2020 to provide Americans with financial aid during the pandemic, federal student loans went into forbearance.<\/p>\n\n\n\n Borrowers stopped having to make student loan payments on federal loans, and those loans stopped accruing interest. <\/p>\n\n\n\n On April 6, 2022, that deferment was extended through August 31, 2022, but you won\u2019t benefit from an extension if you have a private student loan balance. Private loans weren\u2019t frozen by the federal loan relief program because they aren\u2019t federal loans.<\/p>\n\n\n\n Just like student loans aren\u2019t all the same, lines of credit aren\u2019t the same either. Credit cards, for example, often come with high interest rates. They can cost you a lot in interest every month if you carry a high balance.<\/p>\n\n\n\n Federal student loans, whether subsidized or unsubsidized, tend to have fairly low interest rates. The rates for private student debt usually fall somewhere between federal student loans and most credit cards.<\/p>\n\n\n\n Why do interest rates matter? Whenever you borrow money, whether you\u2019re taking out a student loan or buying something on a credit card that you\u2019ll pay for later, you also have to pay interest on that loan above and beyond the amount you borrowed.<\/p>\n\n\n\n A lower interest rate means it\u2019s costing you less to borrow that money.<\/p>\n\n\n\n If you\u2019re carrying a balance on a credit card that has a higher interest rate than your student loan interest, you\u2019ll want to pay down the credit card before you pay down your student loan.<\/p>\n\n\n\n That\u2019s just as true of any other kind of loan, like a personal loan or a car loan.<\/p>\n\n\n\n Always make your minimum payments on all your loans, but if you have some extra cash you want to use to make additional payments, use it toward the loan that has the highest interest rate first.<\/p>\n\n\n\n Student loan borrowers often graduate with a significant principal balance on their student loans and a long loan term. In other words, you owe a lot of money, but you also have a long time to pay it off.<\/p>\n\n\n\n That long repayment term keeps your monthly payments relatively low, but chipping away at your loan amount slowly, over years if not decades, can feel discouraging.<\/p>\n\n\n\n One way to get debt-free sooner is to look into student loan refinancing, but don\u2019t refinance your loan just to get a shorter repayment term. There\u2019s nothing stopping you from making extra payments and paying your loan down faster!<\/p>\n\n\n\n Instead, look into refinancing if you\u2019re having trouble making payments, or, on the flip side, if your personal finances are looking up and you think you can get a better interest rate.<\/p>\n\n\n\n When you were a college student, your future ability to pay back your new loan was really just an estimate based on the fact that you were getting a higher education.<\/p>\n\n\n\n Once you\u2019re working full-time, a student loan refinance can take your actual personal finances into account \u2014 including things like your income and credit score.<\/p>\n\n\n\n Ask your student loan servicer about your refinance or repayment options, especially if you have a great credit report and want to lower your interest rate.<\/p>\n\n\n\n Another way to lower your interest rate is through student loan consolidation, which can combine several federal student loans together into one payment.<\/p>\n\n\n\n Still, make sure you understand the terms of the consolidation before you agree to it. You don\u2019t want to raise your interest rate or end up with an even longer repayment term.<\/p>\n\n\n\n If consolidation isn\u2019t going to improve the terms of your loan, you\u2019re better off sticking to a standard repayment plan:<\/p>\n\n\n\n The best way to make extra payments and pay your debt off faster is to track your monthly spending and look for places to save.<\/p>\n\n\n\n An app like Simplifi by Quicken makes it easy to see where your money is going, helping you stay on top of your spending in less than 5 minutes a week.<\/p>\n\n\n\n If you\u2019re already using Simplifi, remember to check in on your bills & subscriptions list<\/a> every few months to make sure you\u2019re not paying for things you aren\u2019t using. Most subscriptions are billed and paid automatically, making them easy to forget.<\/p>\n\n\n\n Use Simplifi to connect all your credit cards and loans so you can see them all in one place. Simplifi makes it easy to see how much you owe where, so you can decide where your extra savings will do the most good.<\/p>\n\n\n\n2. Is your student loan currently paused?<\/strong><\/h2>\n\n\n\n
3. Is your student loan your most expensive debt?<\/strong><\/h2>\n\n\n\n
4. Can you <\/strong>refinance<\/strong> your <\/strong>loan balance<\/strong>?<\/strong><\/h2>\n\n\n\n
5. What about <\/strong>loan consolidation<\/strong>?<\/strong><\/h2>\n\n\n\n
Pay off all your debt faster with good financial tracking<\/strong><\/h2>\n\n\n\n
1. Save on subscriptions you don\u2019t need<\/strong><\/h3>\n\n\n\n
2. Decide what to pay down first<\/strong><\/h3>\n\n\n\n
3. Track your debt-reduction goals<\/strong><\/h3>\n\n\n\n