As education costs continue to rise, many borrowers are looking for ways to get out of student loan debt. While some people may be eligible for student loan forgiveness, discharge or cancellation, most have to take small steps to pay off student loans over time. Check out the following ways to get out of student loan debt:
1. Choose the right repayment plan
If your monthly payments are too high for your income, you may fall behind and could potentially end up owing more. The best way to tackle this problem is to get an income-based, income-contingent or pay-as-you-earn repayment plan to lower your monthly payments.
2. Pay off private loans first
When possible, make your minimum payment on federal loans and focus most of your repayment funds on the private loans. This will help you in the long run since private loans have variable rates and could go up at any time. Private student loans also have fewer repayment options, which don’t allow for as much flexibility as federal loans.
3. Use direct deposit
Some student loan lenders will offer a lower interest rate for borrowers who use direct deposit because it supports regular payment. Ask your loan servicer if this is an option for you, as it could decrease the total interest you pay over the life of the loan.
4. Consider consolidation
Consolidating your loans allows you to make one payment every month, which may make repayment more manageable. It also might be a good option for you if you don’t qualify for other repayment plans or are in default.
There are drawbacks to consolidation, however. To find out if it’s right for you, talk to a student loan counselor at Take Charge America before making a decision.
5. Focus on the principal
Talk to your loan servicer about putting more of your payment toward your principal. If you include a written request with each payment asking for the total over the minimum to go toward the principal instead of future interest, your servicer can apply your payment appropriately.
Get started with student loan counseling now! Call 877-784-2008 or schedule a call here.