Wouldn’t it be nice if there was a way to make your student loans disappear? While there’s no magic bullet, there are ways to get some free money for student loans and make a bigger dent in your debt.
If you think you’ve exhausted every resource for paying off your student loans, I challenge you to a review of this list. Not everything here will work for you, but something will.
How to get free money to pay off student loans
Whether it’s earning money back on your loan or having some of your debt canceled, these are ways to get free money for student loans and potentially pay them off faster.
1. Earn forgiveness through income-driven repayment
If you’re having trouble making your monthly payments on your federal student loans, you may not be enrolled in the right repayment program.
Fortunately, there are three repayment plans that may be helpful, plus result in having some of your student loan debt canceled:
- Income-Based Repayment (IBR)
- Pay As You Earn (PAYE)
- Revised Pay As You Earn (REPAYE)
These programs lower your monthly payments to be in line with your income and qualify you for loan forgiveness after 20 to 25 years of consistent repayment.
A couple of caveats:
1. Forgiven loan amounts may be considered taxable income and taxes are due the same year you receive forgiveness.
2. Student loans stretched over 20+ years could end up costing you more in interest fees than the 10-year Standard Repayment Plan.
However, if you’re missing payments because you can’t afford them, that means late fees and, if you’re not careful, default. And if you have a lot of student loan debt, holding out for forgiveness could be worth it. These income-driven repayment plans are worth a closer look.
2. Serve the public for 10 years
If you have federal Direct Loans, consider the Public Service Loan Forgiveness program (PSLF).
To qualify, you must:
- Work at least 30 hours a week for 10 years for a qualifying government or non-profit organization (both the Peace Corps and AmeriCorps are qualifying organizations).
- Make 120 qualifying monthly payments under one of the income-driven repayment plans.
- After making your 120th payment, submit the PSLF application for forgiveness.
- Make sure you are still working for the qualifying organization when you submit the application, as well as when you receive the forgiveness.
Even better, loans forgiven under PSLF are not considered taxable income.
3. Sign up for student loan auto-pay
Most private student loan servicers offer an interest rate discount (usually 0.25%) when you set up auto-pay. This will save you hundreds of dollars over the life of your loan – not a ton, but money you can use to pay off your debt a bit faster.
Call or visit your loan servicer’s website for auto-pay information.
4. Apply for forgiveness specific to your career
If it won’t interfere with a full-time job you already have (and want to keep), volunteering can be a great way of getting free money to pay off student loans.
As already mentioned, both the Peace Corps and AmeriCorps are qualifying organizations for the Public Service Loan Forgiveness Program.
Through the Peace Corps, you can serve up to four qualifying years (toward the 10-year qualifying minimum). Through AmeriCorps, you can serve one qualifying year, but with a stipend and education award that you can put toward student loan payments.
You can also volunteer in exchange for student loan payments via crowdfunding sites like Zerobound and SponsorChange.
6. Crowdfund your student loans
Rather than volunteer your time, you can try a straight-up gifting campaign to crowdfund free money for student loans. While Kickstarter may seem the obvious choice, try sites more geared toward campaigns for educational expenses: Generosity by Indiegogo, YouCaring, and GoFundMe.
7. Rent out your home
Do you have a guest room you could turn into a regular rental? Do you have family and friends you could stay with if you were to rent out the whole place?
Or maybe you’re planning on being gone anyway, which is a no-brainer way of making money on a space that would otherwise be empty. Airbnb has the best name recognition, but it’s not the only game in town. Check VRBO, HomeAway, and Flipkey, too.
8. Sell your stuff
If you don’t need it or love it, why do you have it (especially if it represents free money for student loans)?
The obvious go-tos for selling pretty much anything are Amazon, Craigslist, eBay, and Facebook Groups. But if it’s clothes you’re selling, you’ll likely get the best return via clothing-specific sites, like Twice, Poshmark, and ThredUP.
For anything that won’t sell online, never underestimate the power of an old-school yard sale, especially for furniture and miscellaneous household items.
9. Find money in your budget
It might not be the most fun, but one of the best ways to find free money is in your own budget.
Especially consider the categories of food and entertainment, where we tend to do the most spending on unnecessary items. For instance, if you haven’t already, cancel cable once and for all! You have plenty of other more affordable viewing options, including Netflix, Hulu, Amazon Prime, and an HDTV antenna.
Where else in your budget can you find money to put toward student loans instead? Think of the freedom you’ll have later my making a few sacrifices now.
What do you think?
Finding free money to pay off student loans requires a combination of time and resourcefulness. What works for you, what doesn’t, and what would you add to the list?
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