Your long-term student loan repayment goal isn’t too difficult to figure out — like everyone else, you want to be debt-free.
The complicated part is how to get there, and setting immediate goals could lay the groundwork. Let’s review 10 such short-term aims and reveal how they could spur you toward the debt-free finish line.
If you like, skip ahead to the goal that could make the most sense for your repayment. Keep in mind that you might bounce around this list once you accomplish one goal and move onto another.
1. Locate your loans
If you’re near the end of your grace period or are just starting your repayment, a short-term goal could be to determine what you owe and to whom. After all, it’s hard to become debt-free when you’re not fully aware of your debt.
If you borrowed federal loans, start with the National Student Loan Data System, which lists your balance and assigned loan servicer. To access the system, you’ll need to recover or create your Federal Student Aid ID.
Tracking down private loans (if you borrowed any) might be more difficult. If you don’t remember the name of your lender, start with your credit report, which you can access at AnnualCreditReport.com. You can also confirm your lender’s information with your school, which would have had to certify your private loan amount when you originally borrowed it.
2. Decrease your payment amount
Lowering the amount due on your loan balance each month would slow your speed toward achieving a zero balance. But when done right, it could give you the breathing room you need to keep pace with your debt — before eventually re-accelerating your efforts.
If your current monthly payment is unaffordable, or if you’re planning to pay less now and receive loan forgiveness later (see goal #10, below), here’s how to accomplish it:
- Federal loans: Switch to an income-driven repayment (IDR) plan.
- Federal and private loans: Refinance your debt to a longer repayment term, say, from 10 years to a new 15-year term.
3. Pause your loan payments
Like lowering your payments, pausing them comes with the expense of accruing and capitalizing interest. Still, it could give you the respite you need to reset your loan repayment strategy.
Pressing pause on your payments could be especially useful if you’ve suffered a job loss, medical emergency or another economic hardship. Here’s how to do it:
- Federal loans: Apply for deferment or forbearance, depending on which program is right for your situation.
- Private loans: Contact your lender immediately to discuss your options — some banks, credit unions and online lenders offer forbearance in times of financial stress
4. Increase your payment amount
When it’s realistic, making more or larger payments per month is among the sure-fire strategies to end your debt faster.
Maybe you scored a raise at work, found a trimmable expense in your budget or received another sort of financial windfall. Whatever the case, if your federal loan servicer or lender is asking for monthly dues below what you can reasonably afford, you could:
- Pay more than the minimum or pay more often than monthly (but make sure those payments are applied correctly).
- Refinance to a shorter repayment term, say, from 10 years to five.
5. Stop missing your payment due dates
Not all goals have to be complicated. With this one, you aim to ensure you never face another late payment fee and the associated interest charges.
Whether you have federal or private loans, the prescription is the same: Set up autopay from the bank account you use to make payments.
In addition, to avoid the possibility of overdraft fees for months when your account might be a little light, consider creating a budget. This way, barring an unforeseen budget-busting event, you’ll always have enough savings to at least pay the minimum.
6. Escape loan default
If you located your loans (see goal #1, above), you might find yourself here, pursuing another short-term goal.
Escaping student loan default is a long process, but it’s a critical near-term aim if erasing your student loans is to become a reality. Your debt entered default when you failed to make a payment for at least 270 days (federal loans) or perhaps much sooner (private).
Here’s how to cross this goal off the list too:
- Federal loans: Rehabilitate or consolidate your debt by making nine payments over the next 10 months (rehabilitation) or by getting a consolidation loan after making three straight payments or switching to an IDR plan (consolidation)
- Private loans: Contact your lender as soon as possible to review your options, which could include making a catch-up lump-sum payment and entering forbearance
7. Switch federal loan servicers or lenders
The goal of switching servicers or lenders is a worthwhile one. It’ll be easier to work toward your debt’s end when you feel like you’re working with — not against — your creditor.
Consider your options:
- Federal loans: When you apply for a Direct Consolidation Loan, you can choose any of the Department of Education’s nine loan servicers to manage your repayment.
- Federal and private loans: By refinancing with a private lender, you can select which bank, credit union or online lender meets your needs best.
8. Simplify your repayment
If you’re anything like the average American borrower, you have a handful of student loans managed by different loan servicers or lenders. Even if you don’t have a problem with your creditors, you might be unhappy sending payments to a variety of places every month.
Now imagine you could instead submit just one monthly payment to one lender. Plus, every time you have a comment, question or concern about your repayment, you wouldn’t have to make the same phone call twice.
Fortunately, there are ways to combine your debt into one loan. The drill is similar to dealing with bad servicer or lender (see goal #7, above):
- Federal loans: Apply for a Direct Consolidation Loan.
- Private loans: Consolidate and refinance your student loans simultaneously with a bank, credit union or online lender.
9. Reduce your interest rates
If you never miss loan payments (see goal #6, above), you already know that lenders often award nominal interest rate reductions when you sign up for autopay.
Usually, the only other way to reduce your loans’ fixed or variable rates is to refinance the lot with a private lender. By refinancing, not only can you consolidate your debt (see goal #8, above), but also potentially save money by scoring a lower interest rate. The lower your rate, the less interest you’ll need to repay, as our student loan refinancing calculator can attest.
If you’re considering refinancing to score a lower rate, understand the trade-offs before shopping around. Refinancing is irreversible, so when you give up federal loan protections like access to forgiveness (see goal #10, below), you will yield them forever.
10. Apply for loan forgiveness or repayment assistance
You might think this is a long-term goal — Public Service Loan Forgiveness (PSLF), for example, takes 10 years of prompt payments and eligible employment to take effect.
But if you don’t start working toward forgiveness or repayment assistance in the short term, it won’t happen.
With PSLF, for example, you’ll complete a certification form annually to ensure your public or nonprofit employer is eligible for the program.
At the very least, investigate your eligibility for federal loan forgiveness programs. Plus, seek out employers offering 401(k)-style matching for student loan payments and similar perks.
Set your goal and stick to it
If repaying your four-, five- or six-digit student loan balance seems like an unachievable long-term goal, start shorter. Identify near-term objectives that can help you reach the end of your debt.
If you’re feeling overwhelmed by next month’s payment, for example, you might start by considering a pause on your repayment (goal #3). After you catch your breath and regain your confidence, maybe you’ll be ready to increase your payment amount (goal #4). With a full head of steam, you might then look to consolidate your loans (goal #8) or reduce your interest rate (goal #9).
No two borrowers’ path from goal to goal will look the same. The key is to gain your footing and start moving forward, one goal at a time.
Interested in refinancing student loans?Here are the top 7 lenders of 2019!
|Lender||Variable APR||Eligible Degrees|
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1 Important Disclosures for Earnest.
To qualify, you must be a U.S. citizen or possess a 10-year (non-conditional) Permanent Resident Card, reside in a state Earnest lends in, and satisfy our minimum eligibility criteria. You may find more information on loan eligibility here: https://www.earnest.com/eligibility. Not all applicants will be approved for a loan, and not all applicants will qualify for the lowest rate. Approval and interest rate depend on the review of a complete application.
Earnest fixed rate loan rates range from 3.45% APR (with Auto Pay) to 6.99% APR (with Auto Pay). Variable rate loan rates range from 1.81% APR (with Auto Pay) to 6.49% APR (with Auto Pay). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 8.95% for loan terms 10 years or less. For loan terms of 10 years to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95% (the maximum rates for these loans). Earnest variable interest rate 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 1.82% and 5.50% to the one month LIBOR. The rate will not increase more than once per month. Earnest rate ranges are current as of November 6, 2019, and are subject to change based on market conditions and borrower eligibility.
Auto Pay discount: If you make monthly principal and interest payments by an automatic, monthly deduction from a savings or checking account, your rate will be reduced by one quarter of one percent (0.25%) for so long as you continue to make automatic, electronic monthly payments. This benefit is suspended during periods of deferment and forbearance.
The information provided on this page is updated as of 11/06/2019. Earnest reserves the right to change, pause, or terminate product offerings at any time without notice. Earnest loans are originated by Earnest Operations LLC. California Finance Lender License 6054788. NMLS # 1204917. Earnest Operations LLC is located at 302 2nd Street, Suite 401N, San Francisco, CA 94107. Terms and Conditions apply. Visit https://www.earnest.com/terms-of-service, email us at firstname.lastname@example.org, or call 888-601-2801 for more information on our student loan refinance product.
© 2018 Earnest LLC. All rights reserved. Earnest LLC and its subsidiaries, including Earnest Operations LLC, are not sponsored by or agencies of the United States of America.
2 Important Disclosures for SoFi.
3 Important Disclosures for Laurel Road.
Laurel Road Disclosures
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. Mortgage lending is not offered in Puerto Rico. All loans are provided by KeyBank National Association.
ANNUAL PERCENTAGE RATE (“APR”)
There are no origination fees or prepayment penalties associated with the loan. Lender may assess a late fee if any part of a payment is not received within 15 days of the payment due date. Any late fee assessed shall not exceed 5% of the late payment or $28, whichever is less. A borrower may be charged $20 for any payment (including a check or an electronic payment) that is returned unpaid due to non-sufficient funds (NSF) or a closed account.
For bachelor’s degrees and higher, up to 100% of outstanding private and federal student loans (minimum $5,000) are eligible for refinancing. If you are refinancing greater than $300,000 in student loan debt, Lender may refinance the loans into 2 or more new loans.
ELIGIBILITY & ELIGIBLE LOANS
Borrower, and Co-signer if applicable, must be a U.S. Citizen or Permanent Resident with a valid I-551 card (which must show a minimum of 10 years between “Resident Since” date and “Card Expires” date or has no expiration date); state that they are of at least borrowing age in the state of residence at the time of application; and meet Lender underwriting criteria (including, for example, employment, debt-to-income, disposable income, and credit history requirements).
Graduates may refinance any unsubsidized or subsidized Federal or private student loan that was used exclusively for qualified higher education expenses (as defined in 26 USC Section 221) at an accredited U.S. undergraduate or graduate school. Any federal loans refinanced with Lender are private loans and do not have the same repayment options that federal loan program offers such as Income Based Repayment or Income Contingent Repayment.
All loans must be in grace or repayment status and cannot be in default. Borrower must have graduated or be enrolled in good standing in the final term preceding graduation from an accredited Title IV U.S. school and must be employed, or have an eligible offer of employment. Parents looking to refinance loans taken out on behalf of a child should refer to https://www.laurelroad.com/refinance-student-loans/refinance-parent-plus-loans/ for applicable terms and conditions.
For Associates Degrees: Only associates degrees earned in one of the following are eligible for refinancing: Cardiovascular Technologist (CVT); Dental Hygiene; Diagnostic Medical Sonography; EMT/Paramedics; Nuclear Technician; Nursing; Occupational Therapy Assistant; Pharmacy Technician; Physical Therapy Assistant; Radiation Therapy; Radiologic/MRI Technologist; Respiratory Therapy; or Surgical Technologist. To refinance an Associates degree, a borrower must also either be currently enrolled and in the final term of an associate degree program at a Title IV eligible school with an offer of employment in the same field in which they will receive an eligible associate degree OR have graduated from a school that is Title IV eligible with an eligible associate and have been employed, for a minimum of 12 months, in the same field of study of the associate degree earned.
The interest rate you are offered will depend on your credit profile, income, and total debt payments as well as your choice of fixed or variable and choice of term. For applicants who are currently medical or dental residents, your rate offer may also vary depending on whether you have secured employment for after residency.
The repayment of any refinanced student loan will commence (1) immediately after disbursement by us, or (2) after any grace or in-school deferment period, existing prior to refinancing and/or consolidation with us, has expired.
POSTPONING OR REDUCING PAYMENTS
After loan disbursement, if a borrower documents a qualifying economic hardship, we may agree in our discretion to allow for full or partial forbearance of payments for one or more 3-month time periods (not to exceed 12 months in the aggregate during the term of your loan), provided that we receive acceptable documentation (including updating documentation) of the nature and expected duration of the borrower’s economic hardship.
We may agree under certain circumstances to allow a borrower to make $100/month payments for a period of time immediately after loan disbursement if the borrower is employed full-time as an intern, resident, or similar postgraduate trainee at the time of loan disbursement. These payments may not be enough to cover all of the interest that accrues on the loan. Unpaid accrued interest will be added to your loan and monthly payments of principal and interest will begin when the post-graduate training program ends.
We may agree under certain circumstances to allow postponement (deferral) of monthly payments of principal and interest for a period of time immediately following loan disbursement (not to exceed 6 months after the borrower’s graduation with an eligible degree), if the borrower is an eligible student in the borrower’s final term at the time of loan disbursement or graduated less than 6 months before loan disbursement, and has accepted an offer of (or has already begun) full-time employment.
If Lender agrees (in its sole discretion) to postpone or reduce any monthly payment(s) for a period of time, interest on the loan will continue to accrue for each day principal is owed. Although the borrower might not be required to make payments during such a period, the borrower may continue to make payments during such a period. Making payments, or paying some of the interest, will reduce the total amount that will be required to be paid over the life of the loan. Interest not paid during any period when Lender has agreed to postpone or reduce any monthly payment will be added to the principal balance through capitalization (compounding) at the end of such a period, one month before the borrower is required to resume making regular monthly payments.
KEYBANK NATIONAL ASSOCIATION RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE.
This information is current as of November 8, 2019 and is subject to change.
4 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.
5 Important Disclosures for CommonBond.
Offered terms are subject to change. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900). 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 1.9299999999999997% effective October 10, 2019.
6 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 11/07/2019 student loan refinancing rates range from 1.90% to 8.65% Variable APR with AutoPay and 3.49% to 7.75% Fixed APR with AutoPay.
7 Important Disclosures for College Ave.
College Ave Disclosures
College Ave Student Loans products are made available through either Firstrust Bank, member FDIC or M.Y. Safra Bank, FSB, member FDIC. All loans are subject to individual approval and adherence to underwriting guidelines. Program restrictions, other terms, and conditions apply.
1College Ave Refi Education loans are not currently available to residents of Maine.
2All rates shown include autopay discount. The 0.25% auto-pay interest rate reduction applies as long as a valid bank account is designated for required monthly payments. Variable rates may increase after consummation.
3$5,000 is the minimum requirement to refinance. The maximum loan amount is $300,000 for those with medical, dental, pharmacy or veterinary doctorate degrees, and $150,000 for all other undergraduate or graduate degrees.
4This informational repayment example uses typical loan terms for a refi borrower with a Full Principal & Interest Repayment and a 10-year repayment term, has a $40,000 loan and a 5.5% Annual Percentage Rate (“APR”): 120 monthly payments of $434.11 while in the repayment period, for a total amount of payments of $52,092.61. Loans will never have a full principal and interest monthly payment of less than $50. Your actual rates and repayment terms may vary.
Information advertised valid as of 09/23/2019. Variable interest rates may increase after consummation.
|1.81% – 6.49%1||Undergrad & Graduate|
|2.31% – 7.36%2||Undergrad & Graduate|
|1.99% – 6.65%3||Undergrad & Graduate|
|2.43% – 7.60%4||Undergrad & Graduate|
|2.02% – 6.30%5||Undergrad & Graduate|
|1.90% – 8.65%6||Undergrad & Graduate|
|2.74% – 6.24%7||Undergrad & Graduate|