Nov 11, 2024
If you’ve taken on more student loan debt than you're comfortable with, you’re definitely not alone. One-in-four adults under 40 have student loan debt, and graduates with student loans are more likely to report financial struggles, according to Pew Research.
It can be an especially tough position to owe a lot of money, especially in mid-life when you're probably trying to work on other goals. The good news is that there are options out there for you — and you can’t necessarily assume debt relief is off the table.
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You just need to explore solutions to decide which course of action is going to make the most sense for your situation.
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1. Explore your payment plan options
If you have federal student loan debt, there are multiple payment options available to you. You can explore which ones make sense for you — and you may be surprised to find that you could potentially even qualify for an income-driven plan that makes debt relief available.
Income-driven solutions are often the best choice for people worried about their student loan bills because payments are typically capped at between 10% and 15% percent of discretionary income. Plus, when you sign up for an income-driven plan and make 20 to 25 years of payments, you could have your debt forgiven.
This option does mean paying more interest over time and paying your debt for much longer, but the caps on payments should make your monthly payment more affordable. If you’re really struggling, that may be a tradeoff you’re willing to make.
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2. Choose your employer strategically
In some cases, your job choice could provide you with the relief you need from your student loans.
Some employers provide student loan repayment assistance, which could make becoming debt-free easier.
If you work for an eligible non-profit or government organization, you could also qualify for Public Service Loan Forgiveness (PSLF). This would allow you to have your debt eliminated after 10 years of payments.
By exploring these options, you can hopefully find a job where your degree pays off — and that helps you to pay for your education.
3. Refinance private student loans
If you have private student loans instead of federal student loans, you don't have a choice of repayment plans or the ability to get loan forgiveness so these solutions won't help you.
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You can, however, look into refinancing as you may be able to qualify for a new loan at a lower rate. This could both reduce your monthly payments and how much you end up paying in interest. Just be aware that while making your loan payoff time longer lowers payments more, it also increases borrowing costs — so try not to extend your payoff time too much if you plan to refinance.
4. Buckle down and pay off your debt
Finally, another option that may be available to you is to just get very aggressive in trying to get your debt paid off ASAP.
While this may seem impossible, the general guidance is that you shouldn’t take on more student debt than the amount of money you make in a year. Although you've broken that rule, you aren't that far off if you make $62,000 and are $89,000 in debt — it’s not like you’ve doubled the debt burden compared to what’s recommended.
Taking drastic steps like moving in with family, downsizing a home or car, and otherwise cutting expenses to the bone could free up money for extra payments. You could also consider some side work. Coping with a few years of hustle and sacrifice could enable you to say goodbye to your debt for good if you could pull it off.
Ultimately, these are your best options when it comes to your student loan debt. It's extremely difficult to get this type of debt discharged in bankruptcy and nonpayment has dire consequences including damage to your credit and potential seizure of your tax refunds and other government benefits. Finding a way to pay off, or lower the cost of, your debt is going to be your only real choice.
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Christy Bieber has 15 years of experience as a personal finance and legal writer. She has written for many publications including Forbes, Kilplinger, CNN, WSJ, Credit Karma, Insurify and more.
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