If you’re struggling with college debt, there are ways to get rid of your student loans. These programs were created to help people in similar situations by allowing them to pay off their debts more quickly or eliminate their payments altogether. They also offer some assistance if you can’t afford the payments on your current loan, whether because of a job loss or other life event that causes financial hardship.
How To Get Rid Of A Student Loan
Consolidate your student loans.
Consolidating your student loans can help you lower your monthly payments, or it can increase them. It depends on the type of consolidation you choose and whether you have any other options available to you.
If your federal student loans have different terms (some are longer than others), consolidating may allow for a shorter term that reduces monthly payments. This is because the interest is calculated over each loan’s entire term, which means that paying off a longer loan with a lower monthly payment could result in significantly higher interest paid over time. For example, if one student loan has a 10-year term and another has a 30-year term, but both have similar payment amounts per month, consolidating would reduce overall interest paid on both loans by shortening their respective terms to 15 years (30/3).
A downside of consolidation is that once it happens there are almost no opportunities left for forgiveness programs like Public Service Loan Forgiveness (PSLF). If PSLF were an option but not after consolidation would be fantastic!
Refinance your student loans
Refinancing your student loans is a good idea if you’re looking to lower your monthly payments, get a better interest rate, or have a more flexible repayment term. It’s also useful if you want to combine multiple loans into one loan and have access to better loan types, such as federal consolidation or private refinancing.
If you refinance your student loans at the same institution where they originated from, then it’s typically referred to as “reconsolidating” which means that you’ll be keeping all of them in one place.
You can expect between 2% – 5% savings by refinancing with another lender on average (depending on your credit score). With each year that passes after graduation from college without making any progress towards paying off the debt will only make this number increase because the total amount owed will continue growing while interest rates stay constant regardless of how much time has passed since originally taking out these loans!
Apply for the Income-Based Repayment (IBR) program.
If you are having trouble making your monthly student loan payment, there is an option to make the payment more affordable. The Income-Based Repayment (IBR) program caps your monthly payments at 10% of your discretionary income and allows those with lower incomes to pay less than they would otherwise. The first step in applying for this program is submitting a request on the federal student aid website. The application process will require information about how much money you earn each month, how much money goes towards paying off other loans and what is left over after those obligations are met. If you qualify based on these criteria, then the next step is providing documentation from the government that proves it’s true—that way there can be no doubt about whether or not you qualify for IBR and its benefits!
Use the Pay As You Earn (PAYE) plan.
If you think your monthly student loan payment is too high, and you’re worried about missing payments because of it, the Pay As You Earn (PAYE) plan might be for you. The PAYE plan is a federal student loan repayment plan available to eligible borrowers who have high debt-to-income ratios or low income. This means that if you qualify for the PAYE plan, your monthly payments may be lower than they would otherwise be under other plans like REPAYE or IBR.
The PAYE plan can help prevent financial hardship from becoming a reality for borrowers with smaller incomes—so long as they keep up with their payments on time each month (or make arrangements in advance). But there are some drawbacks to consider before signing up for this type of repayment option: For example if interest rates rise above what they were when you signed up for the program—and they’ve been rising fast lately—then those higher rates will apply retroactively; in other words even though it might look like your total amount paid back per month includes only principal plus interest going forward after making timely payments during enrollment period–you’ll have actually paid both principal AND past interest at its original contracted rate (e.g., 6% instead of 4%).
Use the Revised Pay As You Earn (REPAYE) plan.
If you have a Direct Loan, you may be eligible for the Revised Pay As You Earn (REPAYE) plan. The REPAYE plan is different from other income-driven plans in that it’s open to borrowers regardless of their debt balance and family size.
Your monthly payment amount will change every year based on your income, family size, and federal student loan balance. If your payments are too high or too low relative to what they should be under the plan, there are options available to make changes:
- Lowering or increasing payments: You can reduce your monthly payment amount at any time by calling 1-800-848-0979 or visiting StudentLoans.gov/myDirectLoan/payments/#reducepayments
- Changing repayment terms: If you want more time before entering repayment (up to seven years), request an interest subsidy extension at StudentLoans.gov/myDirectLoan/reviewoptions/#interestsubsidyextension
Explore Public Service Loan Forgiveness.
Students who work in public service jobs can apply for Public Service Loan Forgiveness (PSLF). This program forgives federal student loans after 10 years of payments. If you meet all of the requirements, this option will save you thousands of dollars.
To qualify for PSLF, you must:
- Make 120 qualifying payments on your eligible loans (or be at least half way through making those payments)
- Be employed full-time by an eligible government or nonprofit employer
Go back to school with an income-driven repayment plan.
To get on an income-driven repayment plan, you’ll need to apply at StudentLoans.gov. Once you submit your application, the Department of Education will review it and either approve or deny it. If approved, the Department of Education will send you an email (or letter) with a confirmation number and instructions on how to log into your account and see which payment plan they have selected for you.
Once on this plan, your monthly payment amount will be based upon how much money you make each month. It could be less than $50 per month or more than $300 per month—it all depends on what income level they consider appropriate for your current situation (and whether or not there’s anything unusual about that situation). For example: If someone makes $100k per year but has no other expenses besides student loans and rent/mortgage payments (which can easily add up to upwards of $2k per month), their debt burden may seem fairly manageable compared with their earnings potential—so much so that they wouldn’t need a full 40 years worth of payments! And while some people might find themselves in this scenario where paying off their loans quickly isn’t necessary due to having high salary potential + low interest rates = relatively low monthly payments… others might find themselves struggling under crushing financial burdens due solely because their salaries aren’t high enough yet
Enroll in a forgiveness program for teachers.
Another option is to pursue the Teacher Loan Forgiveness program. This program allows for federal student loan forgiveness for teachers who work in any public or private elementary or secondary school that teaches students from low-income families and schools with low graduation rates. Programs are available for teachers working in critical shortage areas, including shortage of math, science, special education and bilingual education teachers. The program requires that you have at least five years of full-time teaching service as a highly qualified teacher (QTP) at an eligible school. QTPs must also meet the following requirements:
- Be employed as a full-time teacher by an eligible employer;
- Have been employed by such employer for each of the two consecutive complete academic years prior to qualifying for any benefit under this subpart;
- Not be in default on any Title IV loans made under part B or D of this title during such period (except if they are being rehabilitated).
Enroll in the Teacher Loan Forgiveness Program.
Enroll in the Teacher Loan Forgiveness Program.
Teachers can get up to $5,000 forgiven if you meet all of these conditions:
- You’ve taught for five consecutive years.
- You taught at a low-income school or one that is considered high-need (for example, if it serves children with disabilities). A full list of eligible schools is available on the Department of Education’s website.
- You taught in a high-need field like special education or math and science (as well as bilingual education). A full list is also available online from the Department of Education website.
If you’re interested in finding out more about whether your loans qualify for forgiveness under this program, contact your loan servicer—the company that manages repayment on your federal student loans—or visit [the Department of Education’s] website here.
There are a lot of options to get rid of a student loan you can’t afford.
- There are a lot of options to get rid of a student loan you can’t afford. If you feel like your student loan payments are too high, or if you have difficulty making regular payments on time, it may be time to consider other options.
- Consolidate your student loans: When consolidating multiple loans into one loan, the interest rate is often lower than your original rate and you can usually get other benefits as well. You may be able to pay off all your debt sooner by consolidating, but there’s also a chance that this could hurt more than help because your monthly payment will increase significantly when compared with what it was before consolidation.* Refinance: Refinancing allows borrowers who hold private or federal Stafford loans (the most common type) to transfer them into new ones at lower rates.* Apply for Income-Based Repayment (IBR) program: This program caps monthly payments at 15 percent of discretionary income (adjusted gross income minus 150 percent of poverty level). Any remaining balance would be forgiven after 25 years; however, if any part of the original loan wasn’t considered eligible for forgiveness under IBR and has not been repaid within 25 years then all remaining balances will become due in full immediately after 25 years regardless of whether they were considered eligible for forgiveness under IBR.* Use Pay As You Earn plan: This plan caps monthly payments at 10 percent
We hope this article has given you a better idea of how to get rid of a student loan. If you have any other questions or concerns, please don’t hesitate to contact us at [email protected]