How to Pay Your Student Loan Debt Off Faster (or Not At All)
Cathie Ericson
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"The 2016 class was the most indebted in history: 70 percent graduated with student loans, and the average balance was $37,173."

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You’re probably familiar with the staggering stats about student loans today—borrowers now owe more than $1.4 trillion combined. And the 2016 class was the most indebted in history: 70 percent graduated with student loans, and the average balance was $37,173, according to Edvisors publisher and student loan expert Mark Kantrowitz.

Odds are, you have some yourself. And that burden can weigh heavy. Fortunately, there are ways to put a big dent in your student loan balance quickly—or even have them paid off for you.

1. Seek out company-sponsored support.

PricewaterhouseCoopers made headlines last fall when the accounting firm announced it was giving associates and senior associates $1,200 a year toward student debt. While this perk isn’t as mainstream as, say, health insurance or free snacks—just 3 percent of companies offer similar assistance now—it’s a valuable incentive worth negotiating at your next company or performance review.

While arguing your case with your employer, Kevin Fudge, government relations and community affairs manager at American Student Assistance, recommends pointing to state legislatures that are exploring tax incentives for private companies offering loan assistance as an employee benefit.

2. Research career-based options.

Depending on your chosen field, you may be eligible for a specialized repayment assistance or forgiveness program. These are common for law school alumni who pursue careers in public interest, teachers in schools serving low-income families, health care providers working in shortage areas, and nonprofit or government employees.

One potential hitch with some programs, cautions student loan expert Heather Jarvis, is that only borrowers with direct loans qualify, which means you may first need to consolidate. So make sure to read the fine print.

3. See if you qualify for an income-driven repayment plan.

The government provides income-driven repayment plans with names like Revised Pay As You Earn Plan (or REPAYE), which was launched last fall, allowing qualifying borrowers to cap monthly payments at a set percentage (generally 10 percent) of discretionary income. Depending on the plan and whether you borrowed for undergraduate or graduate studies, any remaining debt will be forgiven after 20 or 25 years.

Again, it’s important to do some research to ensure you meet all requirements and about whether it’s right for you. While lower payments can help in the short-term, they may also lead to higher interest costs over time.

4. Automate it.

Kantrowitz says most lenders offer an interest-rate reduction—typically between 0.25% and .50%—for borrowers who sign up for auto-debit with electronic billing. Sure, it’s only a slight discount, but every bit counts.

Plus, it reduces the likelihood that you’ll be late or forget to make a payment.

5. Mind the interest.

Interest rates can vary wildly among loans, so keep tabs on what you’re paying on each and instruct your servicers in writing to apply any extra payments to your highest-rate loans first.

And don’t forget: Come tax time, you can deduct up to $2,500 of interest paid on your federal and private student loans on your federal income tax return. It’s an above-the-line income exclusion, Kantrowitz says, so you can claim the deduction even if you don’t itemize.

6. Slip in an extra payment.

If you can manage it, pay your loans twice a month, biweekly—not two full payments, but two halves. That means instead of 12 payments a year, you’re submitting 26 half payments, or 13 full payments. “You’ve just made an extra payment on your student loan without even noticing,” says Kevin Fudge, government relations and community affairs manager at American Student Assistance.

Just make sure your lender applies it to your principal instead of counting it as an early payment.

7. Consider refinancing.

Don’t qualify for a loan forgiveness program? If you have good credit, you may be able to score a lower interest rate by refinancing or consolidating your loans through lenders like SoFi and Earnest. Depending on how big a balance you’re trying to pay down, this could potentially save you thousands over the life of the loan.

This article was updated in January 2017.

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7 comments

    Beware of PLUS loans- I thought I was consigning a loan that my son could consolidate with his other loans but I got stuck with it

    Me too!!! Missed the fine print that said they would NOT be able to consolidate the plus loan with their other loans. Missed the part that the loan could not EVER be put into the students name (as a student loan) Now my husband and I are in $70k of debt that our 2 student have no hope of ever paying in with their already accumulated 60k of regular student loans.(30k each).

    Good to know – with two in college, our goal is to keep their loans at a minimum while NOT paying for every bit – i paid for my entire 6 years without these ‘special’ programs. At times, it hurt, but it taught me the real value of things.

    Make sure to figure out how to guarantee the extra payment goes towards the principal. Some loan holders like Navient make it INCREDIBLY difficult to ensure the extra money goes towards principal rather than interest.

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