The 8 Cheapest Ways to Pay Off Your Student Loans
Laura gives eight tips to pay off your student loans the cheapest ways possible. She also interviews a couple who graduated with $600,000 of student loan debt after graduating from dental and law school. Find out their experiences, missteps, and tips for dealing with loans, having a repayment plan, and getting a great education for less.
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If you’re like many who graduated college in the past decade or so, you’re suffocating under a mountain of student loan debt. The average is at an all-time high: $37,000.
Approximately 43 million borrowers, or seven in ten U.S. graduates, are carrying over $1.25 trillion in student loans. Whew!
The average monthly payment for student loan borrowers between the ages of 20 and 30 is $351. No matter if you can easily afford it or are struggling to make payments, it’s important to know your options.
In this article, I cover the cheapest ways to pay off your student loans. In the podcast episode, you’ll also hear my interview with Amber and Danny Masters, a couple who are drowning in $600,000 of student loans after graduating from law and dental school.
They kept their mountain of student loan debt a secret until they began redtwogreen.com, where they blog about their experiences, missteps, and details of their personal finances.
Here are some of the topics we discuss:
- tips to get a great education with less debt
- a rule of thumb for how much to borrow for school
- the value of having a repayment plan
- how to be proactive about your repayment options
- if they regret going into so much debt for their professional degrees
Free Resource: Online Loan Comparison Chart—a handy chart to compare lenders for student loans and refinancing to a lower interest rate.
What's the Future of Student Loan Debt?
If you have student loans that are crushing your finances and perhaps holding you back from reaching goals like saving for retirement or buying a home, there may be a bright spot in the future. President-Elect Trump has proposed ideas to help borrowers who can’t afford their payments.
Today, if you’re struggling to keep up with student loan payments, you may qualify for an income-based repayment plan. There are several different types, but the Pay As You Earn program caps payments at 10% of your income and wipes out your debt after you’ve made payments for 20 to 25 years, depending on the type of loan you have.
Trump has proposed a repayment plan that would cap student loan payments at 12.5% of income and forgive the balance after you make payments for 15 years. That would raise the cap, but forgive your balance 5 to 10 years sooner than the current option, giving financially stressed borrowers more relief.
Trump has proposed a repayment plan that would cap student loan payments at 12.5% of income and forgive the balance after you make payments for 15 years.
But if you need help paying your loans right now, don’t wait for Trump’s potential plan to be enacted. Go ahead and investigate your options at studentloans.gov. Just remember that the downside of reducing your monthly payment or extending the repayment period is that you end up paying more interest over time.