Student loan debt can quickly get out of hand if you’re not careful. Even if you are managing to make the payments every month, it can feel overwhelming. You need a good strategy to pay them off.
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A recent press release from the Illinois CPA Society has some useful advice for getting your loans paid off. Here are seven great tips to help you get a handle on your student loan debt in the coming year.
An Income-Driven Repayment (IDR) plan can help if you’re struggling to make payments. These plans cap your monthly payment based on your income and family size.
This can mean much lower payments than you’d normally have. Programs like Income-Based Repayment (IBR) or Pay As You Earn (PAYE) can also extend your repayment period to 20 or 25 years, with any remaining balance forgiven at the end of the term.
“Individuals who qualify may be able to lower their monthly payments or possibly earn loan forgiveness after a certain number of qualifying payments. The clock is also ticking on certain loan forgiveness programs with tax-free status, so the time to act is now,” The Illinois CPA Society press release advised.
To apply for an IDR plan, visit the Federal Student Aid website and complete the application process. You’ll also need to recertify your income and family size each year to stay eligible.
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If you work in public service, such as a government job or a nonprofit, you might qualify for Public Service Loan Forgiveness (PSLF). This program forgives the remaining balance on your loans, if you’ve made 120 monthly payments while working full-time in one of these jobs.
“If you work for a qualifying employer and are on an income driven repayment plan, you may be eligible for forgiveness after 10 years,” explained Patti Hughes, president of Lake Life Wealth Advisory Group.
The program is meant to reward those who dedicate their careers to public service. Be sure to double-check the type of loans you have — only certain federal loans are eligible.
If your parents have taken out Parent PLUS loans to help you with college, consolidating them into a direct consolidation loan could make paying them off easier.
This is a way to combine different loans into one. You end up with just one payment a month.
“If you have Parent Plus loans, make sure to take advantage of the double consolidation loophole before the deadline next year,” said Hughes. “This can result in much lower payments by giving the borrower access to different income driven repayment plans.”
