7 Ways To Manage, Reduce, or Eliminate Your Student Loan Debt

Flickr/ KitAy

1.) Pay-as-you-earn• This program limits

payments to just 10% of your discretionary income

• Any remaining balance after 20 years of on-time payments will be forgiven

• For more details, check out the fact sheet

Wikipedia/ Mando vzl

2.) Income-based repayment (IBR)• This program limits

payments to just 15% of your discretionary income

• For those who don’t qualify for pay-as-you-earn

• Any remaining balance after 25 years of on-time payments will be forgiven

• For more details, check out the fact sheet

Flickr/ Andrew Schwegler

3.) Take your time!• Even if you don’t

qualify for an income-dependent repayment plan, you can extend your payment plan’s timeframe up to 25 years

• You’ll pay more in interest over the life of the loan, but the payments will be more manageable

Payments for $50,000 in student loan debt

4.) Lower your interest rate• If you have private student

loans, now may be a good time to refinance and take advantage of low interest rates

• The better your credit, the lower your payment could be

• Lenders like Discover Financial are offering rates as low as 2.99% (variable) or 5.99% (fixed)

Flickr/ 401(k) 2012

5.) Teacher Loan Forgiveness• Teachers in

low-income schools can qualify for up to $17,500 in student loan forgiveness– Full-time secondary and

elementary school teachers can get $5,000 in forgiveness after five consecutive school years

– Highly-qualified mathematics, science, and special education teachers can qualify for $17,500 after five years

6.) Do you work in the public sector?• Public service employee

s may be eligible to have any remaining balance forgiven after 10 years of on-time payments

• Qualifying jobs include– Education– Law enforcement– Healthcare (non-profit)– Public libraries– Public legal services– More (see description) Flickr/ Dave Conner

7.) Deferments and Forbearance• A deferment is a period during

which repayment of your loan is temporarily delayed– May last up to three years during

periods of hardship, such as unemployment

• If you don’t qualify for a deferment, a forbearance may allow you to stop paying for up to 12 months– Unlike a deferment,

interest will continue to accrueShould be used as a last resort

Are you taking advantage of this tax loophole?