How to pay off student loans in 10 years or less

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Several strategies can help you pay off your student loans in as little as a decade. (Shutterstock)

It can feel like it will take you a lifetime to pay off your student loans, especially if you have a six figure student loan balance. But several repayment options can help you pay off your student loans in 10 years or less.

Getting rid of student loan debt early in your working life can help you save on interest and free up money for other financial goals, like saving for retirement, buying a home, or taking a vacation. dream.

If you’re ready to refinance your student loans, visit Credible for compare student loan refinance rates from multiple lenders in minutes.

How to pay off student loans in 10 years

If your goal is to get out of debt as quickly as possible, consider the following options that will help you pay off your student loans in 10 years.

Sign up for the Standard Refund Plan

The Standard Repayment Plan is the default repayment plan for federal student loans – it is designed to help borrowers repay their student loans up to 10 years. You are eligible for this repayment plan if you have the following types of federal loans under the Direct Loans Program or the Federal Family Education Loans (FFEL) program:

  • Subsidized direct loans
  • Direct unsubsidized loans
  • Direct Consolidation Loans
  • Direct Loans PLUS
  • Unsubsidized and Subsidized Federal Stafford Loans
  • FFEL PLUS loans
  • FFEL consolidation loans

Once you graduate and your federal student loan repayment period begins, you can choose a repayment plan. If you do not choose a plan, you will automatically be enrolled in the Standard Refund Plan.

If you have private student loans, there is no standard repayment term. These terms generally range from five to 20 years, depending on the lender.

FEDERAL STUDENT LOAN REPAYMENT PLANS: KNOW YOUR OPTIONS

Is the standard repayment plan right for you?

The answer to this question depends on your personal budget. A major advantage of this plan is that it has fixed monthly payments, which can be easier to budget for. Plus, choosing the 10-year repayment plan over a longer repayment term could help you save money on interest and get out of debt faster.

But the downside of the standard repayment plan is that your student loan repayments can be high, depending on your loan balance.

If the standard repayment plan monthly payment doesn’t fit your budget, you might be better off choosing a more affordable repayment plan. And if you can’t afford your monthly payment at all, consider asking adjournment or by contacting your loan officer to make payment arrangements.

Explore Student Loan Forgiveness

If you have a federal loan, you may be eligible for a student loan forgiveness program. To qualify, you usually have to work for a government or non-profit organization and make a set amount of payments. Two of the most popular student loan forgiveness programs are civil service loan forgiveness and teacher loan forgiveness.

Cancellation of civil service loans

The Public Service Loan Forgiveness (PSLF) is a federal program that provides student loan forgiveness to borrowers who work full-time in the nonprofit or government sector. To qualify, you must have a direct loan or consolidate your federal loans into a direct loan and make payments under an IDR plan.

You must make 120 qualifying student loan payments. As long as you make these payments consecutively, this option can get you out of debt in 10 years. Thereafter, any remaining loan balance will be forgiven to you.

Teacher loan forgiveness

The Teacher Loan Forgiveness Program is a federal program that provides student loan forgiveness of up to $17,500 on subsidized and unsubsidized direct loans and subsidized and unsubsidized federal Stafford loans to full-time teachers. With this limit in place, this program may not get you out of debt entirely, but it can go a long way in helping you get out of debt.

To qualify for this program, you must be a teacher who has worked in a low-income area for five full, consecutive years at an elementary school, high school, or educational services agency. After those five years, you may be eligible for loan forgiveness.

You must also meet the following requirements:

  • You have a bachelor’s degree.
  • You have been fully certified to teach in your state.
  • You have not been waived from licensing or certification requirements.
  • The loans for which you are requesting forgiveness were granted before the end of your five years of qualifying teaching service.

To find out if your workplace is eligible, see the Directory of low-income teachers.

GUIDE TO STUDENT LOAN REPAYMENT PROGRAMS

Make additional payments

Another way to pay off your student loans sooner is to make an extra payment. If you make payments every two weeks, you’ll make one extra payment per year, which could help you save on interest. Even if you can’t afford to make a single extra payment, every dollar counts when tackling student debt.

For example, let’s say you have a $50,000 student loan with a loan term of 10 years, an interest rate of 6.8% and monthly payments of $575. If you pay $40 more per month, you’ll save $1,864 in interest and pay off your loan almost a year sooner. To get an estimate of how much you could save, use a student loan repayment calculator.

Here are three things you can do to free up some extra money to spend on your payments:

  • Make a budget. To determine if you can afford to make additional payments, create a budget. You can create one in Excel or by using pen and paper. Make a list of all your expenses and income. Next, look at your budget to see if there are any places you can cut costs.
  • Get a side scramble. If you like meeting new people and have a car, you can drive for a carpool company on nights and weekends. Do you like to write? Consider applying for a freelance writing gig.
  • Find a roommate. Your housing cost is probably your biggest expense. If you have an extra bedroom in your house or apartment, consider finding a roommate. If your housing cost is $1,200 per month, you can save $600 per month by splitting it in half.

With Credible, you can compare student loan refinance rates from various lenders, all in one place.

Ways to manage costs when you can’t pay off student loans in 10 years

If you simply can’t pay off your student loans in 10 years, consider the following options to make your payments more manageable.

Use an income-driven repayment plan

An income-contingent repayment (IDR) plan bases your monthly student loan payment on your income and family size. The Department of Education offers four IDR plans for eligible federal borrowers. Although the repayment periods for these plans are much longer than the standard 10-year repayment plan, they can be a good option if they make your payments more affordable. Additionally, once your repayment period has elapsed under each plan, any remaining loan balance will be forfeited.

The four IDR plans are:

  • Pay As You Earn Reimbursement Plan (PAYE plan) — The repayment period of the PAYE plan is 20 years. Your monthly payment is usually 10% of your Discretionary Income.
  • Revised Pay As You Earn Reimbursement Plan (REPAYE Plan) — With this repayment plan, your repayment term is 20 years if repaying undergraduate loans and 25 years if repaying graduate loans. As with the PAYE plan, your monthly payment is usually 10% of your Discretionary Income.
  • Income Based Reimbursement Scheme (IBR Scheme) — This repayment plan lasts for 20 years if you had no outstanding balance on a direct loan or FFEL program loan when you took out a direct loan on or after July 1, 2014. The repayment period is 25 years if you had a loan balance at that time. . Your monthly payment is usually 10% of your Discretionary Income if you are a new borrower or 15% if you are not a new borrower.
  • Income Contingent Repayment Plan (ICR Plan) — The ICR Plan lasts 25 years. To qualify, you must have an eligible direct loan. Your monthly payment is the lesser of 20% of your Discretionary Income or what you would pay on a repayment plan with a 12-year fixed payment.

Refinance in the shorter term

When you refinance your student loans, you take out a private loan to pay off your existing federal or private student loan(s), or both. If you have a good credit score and a solid income, you may qualify for an interest rate that is lower than your current rate. So if you’re making more money now than when you took out your student loans, or if your credit score has since improved, refinancing can get you a much better interest rate. If your credit score isn’t great, you may need a co-signer to help you get the best rates.

By refinancing for a shorter term, you’ll pay off your student loans faster (even if it still takes 10+ years) and save a lot of money in interest over the life of your loan.

For example, simply refinancing a 20-year loan to a 15-year loan could save you $12,880 in interest, even if your interest rate doesn’t change. Although your monthly payment is $68 more, you will end up paying less for your student loan overall and be debt free sooner.

But before you refinance federal student loans into a private loan, keep in mind that doing so will cause you to lose federal benefits, like loan forgiveness or forbearance. On the other hand, if you only have private student loans, refinancing may be the best option for you.

Credible allows you compare student loan refinance rates from multiple lenders without affecting your credit.

About Judith J. George

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