- Francesca Sacco
What Are My Options for Paying Off Student Debt?
If you’re one of the more than 43 million U.S. adults with federal student loan debt, you’re probably eager to get those loans paid off and take a giant leap closer to financial freedom.
But for many buyers, the process of paying down those loans takes years and years. As your life changes over time, your ability — or motivation — to pay higher amounts may also change, requiring you to explore new options for repaying that debt.
Although those student loans may be a significant financial burden — and an obstacle to other financial goals — student loan borrowers have a number of options when it comes to paying off this debt. If you’re searching for a better way to manage and repay your student loans, consider some of the following options.
Choose a repayment plan that you can follow.
In most cases, student loan servicers offer several different repayment plans that are based on timeline, income or other criteria.
If you’re wanting to shorten the time it takes to repay your loans, one option is to simply pay an additional amount beyond the minimum due, giving you the flexibility to return to paying a lower amount if your financial circumstances change.
If you’re struggling to pay the current minimum amount, you may want to explore options that lower your payment and/or offer a period of deferment to provide temporary financial relief.
While you might not be eligible for certain types of repayment plans, your student loan servicer can help you explore your options to find out which plan strikes the right balance between repaying your debt and not disrupting the rest of your finances.
See if you qualify for a repayment assistance program.
How would you like to have someone else pay some of your student loan debt? A number of government and private employer programs offer to make payments on your student loan debt or even forgive some of your debt after a set period of time.
Keep in mind that there will be eligibility requirements you’ll have to meet, which may include where you live, the amount of time you serve in a role and other criteria.
Accelerate repayment of your loans.
Want to get debt-free as quickly as possible? You could choose to pay more than the minimum payment on your loans to resolve this debt and shift your focus to other goals.
A student loan repayment calculator can help you project the long-term impact of changing your repayment amount. Even small changes in that payment amount could accelerate the time it takes you to fully repay your loans by months or even years.
Take advantage of tax deductions.
Many taxpayers paying off student debt may be eligible for deductions and credits on their taxes. The most common deduction is for student loan interest paid during any given tax year, which can save you money on your taxes owed.
Remember to make these deductions when you file. You should receive a tax form from your loan servicer that tells you exactly how much interest you paid during the most recent tax year.
Consider paying interest while still in school.
If you’re still in school but want to get a jump on student loan repayment, one option is to pay off interest accrued while you’re still a student.
This relatively small payment can make a big difference once repayment starts, and you can deduct your payments from your taxable income.
Reduce your interest rate through student loan refinancing.
Suffering from high interest rates on your student loans? Refinancing can help you consolidate debt at a lower rate, saving you interest and even opening up better repayment plan options.
Be careful when refinancing, though. When you switch to a private servicer, you may lose access to certain options, such as payment deferrals and even federal loan repayment options.
Whether you want to accelerate debt repayment, minimize your current student loan bills or consolidate debt to secure a lower rate and better repayment terms, your local credit union can help understand your goals and create a repayment strategy that meets your needs.
Access these benefits by becoming a member today. Open a checking account to get started.