Do you ever feel completely and perpetually stuck with your student loan debt?
Maybe you’ve switched your repayment plan, consolidated or taken another measure, yet still feel that there’s no way out?
Instead of being complacent, reach the end of your debt either by getting extremely aggressive with repayment — or by becoming strategically passive. Here’s how.
Extremely aggressive: When you’d benefit from attacking your student loan debt
As you would imagine, paying off your student loans faster than you originally planned comes with many perks. You could move on to other financial goals and forget about your debt, not to mention the emotional strain it might have caused. You would be free to divert more of your paycheck to savings, for example, or use your newly improved credit score to buy a home.
Fortunately, there are many tools at your disposal in attack mode. They include:
- Trimming your budget to the point of replicating dorm life, allowing you to throw every extra cent at your debt
- Opening up the lines of communication with your servicer to confirm payments are being applied correctly
- Signing up for autopay to receive a rate reduction, and ensure you avoid unnecessary fees and never miss a payment
- Choosing the debt avalanche or snowball method to whittle your loans down one at a time
- Making extra (large) payments when you receive a raise, tax refund or other financial windfalls
- Seeking jobs that offer repayment matching or starting a money-earning side hustle to increase your payment amounts further
- Refinancing your loans to a shorter repayment term and a lower interest rate
The faster you pay off your education debt, the cheaper it’ll be to accomplish. Say you have $50,000 tagged at 7.00% and are due to repay it in eight years. Paying it off in four years instead would take a lot of effort, but it would also result in a ton of savings — $6,900, to be exact.
How much could you save by attacking your debt? Try plugging some numbers into this calculator to find out.
Strategically passive: When you’d benefit from playing it slow with your student loan debt
Quickly paying off student loan debt isn’t possible — or even prudent — for every borrower. You might say that for some borrowers, taking the stairs is better than the elevator.
There are a few rewards for a gradual repayment, as long as you’re strategically passive. You might enjoy more breathing room in your monthly budget (though make sure you understand how interest accrues on your debt). In fact, you might decide to pay as little as possible now to receive more loan forgiveness later, via a program like Public Service Loan Forgiveness (PSLF).
To successfully slow down your student loan repayment, possible steps include:
- Applying for deferment or forbearance — or rehabbing a defaulted loan — while you get back on your feet
- Lowering your monthly payment via an Income-Driven Repayment plan (for federal loans only) or by refinancing
- Signing up for autopay to receive a rate reduction, and ensure you avoid unnecessary fees and never miss a payment
- Seeking federal loan forgiveness or loan repayment assistance programs via your state
Most student loan slowdown tactics give way to accruing, even capitalizing interest. Whether you defer (or pause) payments while you’re unemployed, make $0 payments under an IDR plan or refinance to a longer loan term, interest will be tacked onto your balance. Still, this could be the right path to take, particularly if some or all of your debt will be wiped away at the end.
Say you’re a teacher at a public elementary school earning $56,900, the median wage for that job, according to the Bureau of Labor Statistics. And thanks to borrowing for both your bachelor’s and master’s degrees, you’re weighed down by $80,000 worth of federal student loan debt, repaying it on an IDR plan at 6.00% interest.
You might be wise to make the minimum payment — as little as $323 per month and $46,633 overall — until PSLF cancels the remainder at the 10-year mark. (If you instead trudged forward paying $888 per month on a standard 10-year repayment plan, you’d shell out $106,580, including interest, and there’d be nothing left for Uncle Sam to forgive.)
Or, if the teacher in this example works in an underserved district, they could score $5,000 to $17,500 of Teacher Loan Forgiveness after five years of teaching.
And even if you’re not eligible for PSLF or other similar programs, you might still be better off moving strategically slow.
For example, if you earn a meager wage (hopefully, for a job you love), you could accept paying more interest overall in exchange for lower monthly payments and eventual forgiveness. All four IDR plans wipe away your balance after 20 to 25 years of payments.
Measure the trade-offs of your IDR plan by using the calculator that corresponds to your plan type:
Of course, if your circumstances change midway through your repayment — perhaps you receive a significant inheritance — you might switch to the extremely aggressive approach to end your debt once and for all.
Don’t get stuck in the middle
Ask yourself how you’ve been repaying your debt to date. Have you made an extra (large) payment one month only to forget to submit another the next month? Have you been just paying the minimum without an end in sight? Or have you been working toward loan forgiveness without confirming your eligibility for it?
Not having a plan is the worst of approaches to repaying student loan debt. You’ll spend more money than you would with the extremely aggressive approach and more time than you would following the strategically passive route.
Now ask yourself which of the two proven approaches fits your situation best:
- Extremely aggressive: If your income is on the rise and forgiveness isn’t foreseeable, you’re likely better off attacking your debt. That’ll be especially true if you have the credit (or a cosigner) to lower your interest rate via refinancing.
- Strategically passive: If you can’t muster monthly payments, lowering your dues would be wiser than increasing them. The approach could also be best if you’re working toward receiving partial or full loan forgiveness.
Settling on an approach is the hard part. You’ll still likely have years of payments ahead of you, but at least you’ve unfolded the road map.
Whether you elect to get there fast — or to slow down — the time to get going is now. It’ll be easier to stay motivated once you know you’re moving in the right direction.
Interested in refinancing student loans?Here are the top 9 lenders of 2021!
|Lender||Variable APR||Eligible Degrees|
|1.88% – 6.15%1||Undergrad & Graduate|
|1.88% – 5.64%2||Undergrad & Graduate|
|2.50% – 6.85%3||Undergrad & Graduate|
|1.89% – 5.90%4||Undergrad & Graduate|
|2.25% – 6.39%5||Undergrad & Graduate|
|1.88% – 5.64%6||Undergrad & Graduate|
|1.90% – 5.25%7||Undergrad & Graduate|
|2.39% – 6.01%||Undergrad |
|2.13% – 5.25%8||Undergrad & Graduate|
|Check out the testimonials and our in-depth reviews!
1 Important Disclosures for Splash Financial.
Splash Financial Disclosures
Terms and Conditions apply. Splash reserves the right to modify or discontinue products and benefits at any time without notice. Rates and terms are also subject to change at any time without notice. Offers are subject to credit approval. To qualify, a borrower must be a U.S. citizen or permanent resident in an eligible state and meet applicable underwriting requirements. Not all borrowers receive the lowest rate. Lowest rates are reserved for the highest qualified borrowers. If approved, your actual rate will be within a range of rates and will depend on a variety of factors, including term of loan, a responsible financial history, income and other factors. Refinancing or consolidating private and federal student loans may not be the right decision for everyone. Federal loans carry special benefits not available for loans made through Splash Financial, for example, public service loan forgiveness and economic hardship programs, fee waivers and rebates on the principal, which may not be accessible to you after you refinance. The rates displayed may include a 0.25% autopay discount
The information you provide to us is an inquiry to determine whether we or our lenders can make a loan offer that meets your needs. If we or any of our lending partners has an available loan offer for you, you will be invited to submit a loan application to the lender for its review. We do not guarantee that you will receive any loan offers or that your loan application will be approved. Offers are subject to credit approval and are available only to U.S. citizens or permanent residents who meet applicable underwriting requirements. Not all borrowers will receive the lowest rates, which are available to the most qualified borrowers. Participating lenders, rates and terms are subject to change at any time without notice.
To check the rates and terms you qualify for, Splash Financial conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, the lender will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.
Splash Financial and our lending partners reserve the right to modify or discontinue products and benefits at any time without notice. To qualify, a borrower must be a U.S. citizen and meet our lending partner’s underwriting requirements. Lowest rates are reserved for the highest qualified borrowers. This information is current as of June 1, 2021.
2 Rate range above includes optional 0.25% Auto Pay discount. Important Disclosures for Earnest.
Interest Rate Disclosure
Actual rate and available repayment terms will vary based on your income. Fixed rates range from 2.59% APR to 5.79% APR (excludes 0.25% Auto Pay discount). Variable rates range from 1.88% APR to 5.64% APR (excludes 0.25% Auto Pay discount). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 36% (the maximum allowable for these loans). Earnest variable interest rate student loan refinance loans are based on a publicly available index, the one month London Interbank Offered Rate (LIBOR). Your rate will be calculated each month by adding a margin between 2.04% and 5.8% to the one month LIBOR. Earnest rate ranges are current as of 6/8/2021, and are subject to change based on market conditions.
Auto Pay Discount Disclosure
You can take advantage of the Auto Pay interest rate reduction by setting up and maintaining active and automatic ACH withdrawal of your loan payment. The interest rate reduction for Auto Pay will be available only while your loan is enrolled in Auto Pay. Interest rate incentives for utilizing Auto Pay may not be combined with certain private student loan repayment programs that also offer an interest rate reduction. For multi-party loans, only one party may enroll in Auto Pay.
Student Loan Refinancing Loan Cost Examples
These examples provide estimates based on payments beginning immediately upon loan disbursement. Variable APR: A $10,000 loan with a 20-year term (240 monthly payments of $72) and a 5.89% APR would result in a total estimated payment amount of $17,042.39. For a variable loan, after your starting rate is set, your rate will then vary with the market. Fixed APR: A $10,000 loan with a 20-year term (240 monthly payments of $72) and a 6.04% APR would result in a total estimated payment amount of $17,249.77. Your actual repayment terms may vary.Terms and Conditions apply. Visit https://www.earnest. com/terms-of-service, e-mail us at [email protected], or call 888-601-2801 for more information on our student loan refinance product.
Earnest Loans are made by Earnest Operations LLC or One American Bank, Member FDIC. Earnest Operations LLC, NMLS #1204917. 535 Mission St., Suite 1663, San Francisco, CA 94105. California Financing Law License 6054788. Visit earnest.com/licenses for a full list of licensed states. For California residents (Student Loan Refinance Only): Loans will be arranged or made pursuant to a California Financing Law License.
One American Bank, 515 S. Minnesota Ave, Sioux Falls, SD 57104. Earnest loans are serviced by Earnest Operations LLC with support from Navient Solutions LLC (NMLS #212430). One American Bank and Earnest LLC and its subsidiaries are not sponsored by or agencies of the United States of America.
© 2021 Earnest LLC. All rights reserved.
3 Important Disclosures for CommonBond.
Offered terms are subject to change and state law restriction. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900), NMLS Consumer Access. If you are approved for a loan, the interest rate offered will depend on your credit profile, your application, the loan term selected and will be within the ranges of rates shown. All Annual Percentage Rates (APRs) displayed assume borrowers enroll in auto pay and account for the 0.25% reduction in interest rate. All variable rates are based on a 1-month LIBOR assumption of 0.15% effective Jan 1, 2021 and may increase after consummation.
4 Important Disclosures for Laurel Road.
Laurel Road Disclosures
All credit products are subject to credit approval.
Laurel Road began originating student loans in 2013 and has since helped thousands of professionals with undergraduate and postgraduate degrees consolidate and refinance more than $4 billion in federal and private school loans. Laurel Road also offers a suite of online graduate school loan products and personal loans that help simplify lending through customized technology and personalized service. In April 2019, Laurel Road was acquired by KeyBank, one of the nation’s largest bank-based financial services companies. Laurel Road is a brand of KeyBank National Association offering online lending products in all 50 U.S. states, Washington, D.C., and Puerto Rico. All loans are provided by KeyBank National Association, a nationally chartered bank. Member FDIC. For more information, visit www.laurelroad.com.
As used throughout these Terms & Conditions, the term “Lender” refers to KeyBank National Association and its affiliates, agents, guaranty insurers, investors, assigns, and successors in interest.
Assumptions: Repayment examples above assume a loan amount of $10,000 with repayment beginning immediately following disbursement. Repayment examples do not include the 0.25% AutoPay Discount.
Annual Percentage Rate (“APR”): This term represents the actual cost of financing to the borrower over the life of the loan expressed as a yearly rate.
Interest Rate: A simple annual rate that is applied to an unpaid balance.
Variable Rates: The current index for variable rate loans is derived from the one-month London Interbank Offered Rate (“LIBOR”) and changes in the LIBOR index may cause your monthly payment to increase. Borrowers who take out a term of 5, 7, or 10 years will have a maximum interest rate of 9%, those who take out a 15 or 20-year variable loan will have a maximum interest rate of 10%.
KEYBANK NATIONAL ASSOCIATION RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE.
This information is current as of April 29, 2021. Information and rates are subject to change without notice.
5 Important Disclosures for SoFi.
Fixed rates from 2.74% APR to 6.74% APR (with autopay). Variable rates from 2.25% APR to 6.39% APR (with autopay). All variable rates are based on the 1-month LIBOR and may increase after consummation if LIBOR increases; see more at SoFi.com/legal/#1. If approved for a loan your rate will depend on a variety of factors such as your credit profile, your application and your selected loan terms. Your rate will be within the ranges of rates listed above. Lowest rates reserved for the most creditworthy borrowers. SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers, or may become available, such as Income Based Repayment or Income Contingent Repayment or PAYE. SoFi loans are originated by SoFi Lending Corp. or an affiliate (dba SoFi), a lender licensed by the Department of Financial Protection and Innovation under the California Financing Law, license #6054612; NMLS #1121636 (www.nmlsconsumeraccess.org). Additional terms and conditions apply; see SoFi.com/eligibility for details. SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE.
6 Important Disclosures for Navient.
7 Important Disclosures for LendKey.
Refinancing via LendKey.com is only available for applicants with qualified private education loans from an eligible institution. Loans that were used for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not eligible for refinancing with a lender via LendKey.com. If you currently have any of these exam preparation loans, you should not include them in an application to refinance your student loans on this website. Applicants must be either U.S. citizens or Permanent Residents in an eligible state to qualify for a loan. Certain membership requirements (including the opening of a share account and any applicable association fees in connection with membership) may apply in the event that an applicant wishes to accept a loan offer from a credit union lender. Lenders participating on LendKey.com reserve the right to modify or discontinue the products, terms, and benefits offered on this website at any time without notice. LendKey Technologies, Inc. is not affiliated with, nor does it endorse, any educational institution.
Subject to floor rate and may require the automatic payments be made from a checking or savings account with the lender. The rate reduction will be removed and the rate will be increased by 0.25% upon any cancellation or failed collection attempt of the automatic payment and will be suspended during any period of deferment or forbearance. As a result, during the forbearance or suspension period, and/or if the automatic payment is canceled, any increase will take the form of higher payments. The lowest advertised variable APR is only available for loan terms of 5 years and is reserved for applicants with FICO scores of at least 810.
As of 04/07/2021 student loan refinancing rates range from 1.90% APR – 5.25% Variable APR with AutoPay and 2.95% APR – 7.63% Fixed APR with AutoPay.
8 Important Disclosures for PenFed.
Annual Percentage Rate (APR) is the cost of credit calculating the interest rate, loan amount, repayment term and the timing of payments. Fixed Rates range from 2.89%-4.78% APR and Variable Rates range from 2.13%-5.25% APR. Both Fixed and Variable Rates will vary based on application terms, level of degree and presence of a co-signer. These rates are subject to additional terms and conditions and rates are subject to change at any time without notice. For Variable Rate student loans, the rate will never exceed 9.00% for 5 year and 8 year loans and 10.00% for 12 and 15 years loans (the maximum allowable for this loan). Minimum variable rate will be 2.00%. These rates are subject to additional terms and conditions, and rates are subject to change at any time without notice. Such changes will only apply to applications taken after the effective date of change.