Student loan forgiveness has been in the news a lot in the past year or two, starting with the “pandemic pause” on many federal student loan payments and continuing through the past week.
In fact, the U.S. Supreme Court is considering a case about student loans now.
Regardless of the outcome, thousands and thousands of newly minted college graduates are going to be looking at student loan bill payments later this year. And even more people who graduated college years ago are still paying off their loans. The student loan industry in the United States is massive, topping a collective $1.78 trillion (yes, trillion with a T!) in federal and private loan debt, according to the Federal Reserve.
How do you manage?
Your student loan payment will depend on a few things:
- How many loans you took out, and for how much.
- The interest rate on those loans.
- Your repayment term.
The average student loan debt for someone who got a Bachelor’s degree is around $34,000 for those who went to a state university, and nearly $60,000 for those who attended a private college.
Fortunately, there are several ways to reduce the amount you have to repay or make the payments manageable. Here are a few options:
Choose a career in public service.
There are several Public Service Loan Forgiveness programs in a wide variety of careers. Through some of these programs, you can work for the government or a 501(c)(3) nonprofit, make 10 years’ worth of monthly payments, and have the remainder of your loans forgiven.
Consider an Income-Driven Repayment Plan.
For your federal loans, you can choose an income-driven repayment plan. While it may extend the length of your payment plan, you may save money in the long run while saving your budget. After 20 or 25 years, your student loans could be forgiven, but you’ll be taxed on that remainder.
Budget, budget, budget.
Treat your student loan payment like any other mandatory bill. Make sure to account for it in your budget, prioritize it and do everything you can to pay it off early if you can. Each student loan provider may have different rules around how to ensure any extra payments are going toward your principal and not your interest, so be sure to check in with them for advice before making extra payments.
Consider refinancing.
Interest rates are pretty high right now, and the interest rate for your student loan might be higher than you’d like it to be. It’s always worth a conversation with someone here at CommonWealth One about whether refinancing your student loans could be worthwhile for you.
Remember, we’re here for you, for life — from graduation through any advanced degrees, career changes and even through retirement. Don’t hesitate to contact CommonWealth One for all your financial needs.
Learn more about Student Loan Forgiveness with our financial literacy partner Banzai.
Apply to refinance your existing student loans with CommonWealth One.
