Currently, the average graduate in the United States accrues over $37,650 in student loan debt to pursue a bachelor’s degree.
The numbers speak volumes. Of the 45 million student borrowers in the U.S., 95% are indebted up to $36,500 in loans to government-backed lending institutions such as the U.S. Department of Education’s Federal Student Aid (FSA).
This leaves the remaining 5% with education loans from private lenders like Sallie Mae — the standard amount of student loan debt faced by those with private student loans is $55,000 per borrower.
Considering the steady increase in college tuition charged at public and private universities across the nation, figuring out how to pay off student loans fast is a priority for many graduates.
The financial burden of student loan debt can significantly affect a borrower’s personal financial goals. But to avoid getting held up by education loans, borrowers need to be aware of the options available to them.
Financial relief options differ depending on the type of education loan — federal or private.
As a majority of graduates in the U.S. are indebted to federal lenders rather than private creditors, this allows most borrowers to take advantage of federal loan assistance opportunities.
Individuals who have private education loans are ineligible for the assistance offered to those with federal student loan debt, however they can appeal to their lenders for helpful alternatives.
Whether it’s reducing private or federal student loans, there is assistance and strategies that can help borrowers get rid of student loan debt faster than average in order to move forward financially.
Federal Student Loan Repayment & Forgiveness Options
Federal student loans generally fall into one of the following categories:
- Subsidized Loans: With federally subsidized student loans, interest does not accumulate for the first two years the borrower is in school or up to half of the program’s length. And borrowers are also entitled to a “grace period” in which they do not have to start paying off the loan(s) for up to six months after finishing their education.
- Unsubsidized Loans: Borrowers who have unsubsidized federal student loans are completely responsible for paying off all of the interest accrued over the course of the loan term.
- PLUS Loans: These are unsubsidized federal student loans reserved for students pursuing a graduate or professional degree. Parents of dependent undergraduate students are also able to apply for PLUS loans to help with tuition.
Graduates with subsidized, unsubsidized, or PLUS federal student loans can qualify for a variety of loan forgiveness programs.
When it comes to paying off student loans fast, federal student loan forgiveness programs are among some of the best options.
With most graduates still paying off student debt well after two decades since being out of school, those enrolled in a federal loan forgiveness program can get rid of student debt relatively quicker — as soon as five years after graduating in some cases.
Public Service Loan Forgiveness
Public Service Loan Forgiveness (PSLF) is an excellent student loan assistance program for graduates who are interested in either working or volunteering in the public service sector.
Those enrolled in PSLF can have the remaining balance on their federal student loans absolved upon making 120 payments towards their debt through an income-driven repayment (IDR) plan.
Borrowers who follow an IDR plan have the monthly payment amount on their student loan debt adjusted or lowered so it is more manageable for their current level of income.
Up until all 120 payments have been received, the borrower must work full-time for a qualifying employer, agency, or organization.
Borrowers who are employed by a U.S. federal, state, local, or tribal government or nonprofit organization qualify as well as servicemen in the U.S. military and volunteers for AmeriCorps and the Peace Corps among other programs.
It can take a borrower approximately 10 years to pay the required number of payments according to an IDR plan — less than half of the time it would take to get rid of the full amount of their student debt.
Teacher Loan Forgiveness Programs
Teachers have even more options when it comes to federal loan assistance.
Educators who borrowed federal student loans can have up to $17,500 of that debt forgiven through the Teacher Loan Forgiveness (TLF) program under the FSA.
The FSA TLF program helps borrowers who have taught full-time at a qualifying educational institution — typically a low-income elementary or secondary school, for five consecutive years.
Although the financial assistance from FSA TLF is rather limited compared to PSLF, it’s a great opportunity for teachers with less than the national average in student debt.
Many of the borrowers enrolled in FSA TLF can pay off their loans within just five years.
Alternatively, teachers can look into the forgiveness programs for educators offered by their state or local government.
For example, New York State-certified teachers are eligible to join the NYC Loan Forgiveness Program.
After serving at least six consecutive years as a teacher in a qualifying school, participants can receive up to $24,000 in financial assistance for their student loans.
Private Student Loan Assistance
While financing opportunities for private student loans are far fewer than those for federal education loans, there are ways to make paying the debt off easier.
Negotiate Better Loan Terms
Borrowers with private student loans can negotiate with their lending institution or creditor for more favorable loan terms or repayment plans.
Lower interest rates or customized repayment options can be really helpful to those struggling to pay off education loans lent by private institutions.
Refinancing
Another suggested strategy for making private student loan debt more manageable is to refinance the loan(s).
When a borrower refinances the debt, it can be transferred to a lender of their choice — giving the borrower more leverage in terms of settling for improved repayment conditions.
Many refinancers can even choose between a fixed interest rate, which is an interest rate that remains unchanged throughout life of the loan, or a variable interest rate.
Like the name infers, a variable interest rate can increase or decrease over the course of the loan term depending on the status of the economy.
Generally, those with an overwhelming amount of private student loan debt tend to prefer a fixed interest rate as it is more conducive to staying on a consistent repayment schedule.
Manage Debt with HRCCU
Managing student loans or any other type of debt can be stressful and consuming. But borrowers can overcome financial hurdles with the proper support.
The financial advisors at HRCCU help members get their debt under control by offering competitively low interest rates, affordable financial counseling services, and flexible repayment options.
For students specifically, HRCCU offers scholarships to high school seniors attending an accredited educational institution.
Through quality financial assistance programs and resources, the financial counselors at HRCCU ensure members receive the necessary support to help them achieve their goals.
To learn more about how we can help you overcome debt or secure a better financial future, contact us today.
