Six tips for paying off student loans (and the pitfalls to avoid)


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Standard: Your loan service company will spread the total amount you owe over a 10-year period. If you pay the same amount for 10 years, you’re done.

Diploma : Like the standard plan, this also lasts for 10 years – but you start paying less and the payments increase every two years. This option may be of interest to borrowers who know they will earn more if they work longer.

Expanded: Pay a lower amount over a longer period of time.

Income Based Refund (IDR): Pay what you can afford. In IDR plans, you can pay off your loans for 20-25 years, but the payments will still be what you can afford. Some people won’t owe anything. Then after 20-25 years (depending on your loan type and plan) anything you haven’t paid is canceled. If you participate in this plan, you will need to certify your income each year.

If you got a private loan from a bank, you might have fewer options than these federal student loans. You will need to call your bank and see what options they offer.

2. Pay attention to tolerance

If you’re having trouble making your payments or you’re running out of money, your loan officer may suggest that you opt for forbearance, which temporarily suspends your student loan payments. But that doesn’t necessarily mean that forbearance is the best option for you.

“Nine times out of 10, income-tested reimbursement will be a much better option,” says Bonnie Latreille, director of the nonprofit Student Borrower Protection Center. Latrielle says that forbearance might sound like a good idea, but it can leave you with higher payments and higher interest in the long run.

3. Do your own research

Your student loan manager is your primary point of contact for your student loans. But don’t treat them like a guide. “Make sure you go see them informed. Make sure you know what you want to do and what your options are,” says Latreille.

Your loan officer won’t always suggest what’s best for you, so you should be your own lawyer. If they grow back? Ask for written confirmation that they have put you in a plan that you want to follow.

4. Give yourself space and time to organize yourself

“Any kind of supported project, like loan processing, takes real time and deserves our full attention when we get it done,” says Elizabeth Emens, professor at Columbia Law School and author of Life Admin: How I Learned to Do Less, Do Better, and Live More, a book about invisible work in all of our lives.

You’ll need to make sure your student loan manager always has your most up-to-date address on file and research the payment plan that’s right for you. Giving yourself the time to do these things will pay off in the long run.

5. Tackle your loans head-on

There is only so much that you can work on and only so cheap that you can live. But if you have the time to work harder or cut costs in other areas of your life, it may be worth doing. If you can make these payments now, you will have more time later to spend the way you want.

6. Be VERY careful when it comes to financing or loan consolidation.

Consolidation is a process that consolidates all of your federal loans into one federal loan. Refinancing is a similar process that consolidates your loans into one private ready. For some, these may be good options, but they can be risky. For example, if you refinance your loans, you lose all federal repayment plans, like the IDR. Consolidation can affect your status in an existing forgiveness plan.

So before taking any of these routes, do your research.


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The audio for this episode was produced by Sylvie Douglis and originally aired on June 10, 2019. This the original audio can be found here.

Copyright 2020 NPR. To learn more, visit https://www.npr.org.

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