The new year is the perfect period for making new resolutions. It gives an opportunity to check your finances, and create a new student loan plan in 2018. According to the studies, there are more than 44 million borrowers who repay over $1.4 trillion in student loans. There are certain tips that will help manage the student loan, but what if that’s not enough? Do you want to be among those, who became student loan debt-free? Here are 5 resolutions for your student loans.
Refinancing of Student Loans
As a rule, student loans refinancing is the best way of making the interest rate go down. It is possible to save a considerable amount on student loans. This option will help you put together the existing federal and personal student loans into one, whose interest rate is much lower.
There are many lenders, who propose student loans with the interest rates 2.50% – 3.00%. They help to lower interest rates on in-school private loans and federal student loans. One can select both fixed and variable rates and choose between loan terms that range from 5 to 20 years.
Eligibility requirements vary from lender to lender. Underwriting criteria differ as well. They may include your minimum income, credit profile, monthly free cash flow and debt-to-income. It is expected that interest rates will go up again in 2018. So try your best to refinance your student loan till the interest rate did not increase.
Consolidate Your Federal Student Loans
This type of consolidation gives you a possibility to combine the federal student loans you already have into one federal student loan. The federal government proposes a Direct Consolidation Loan, while it is not connected with student loans refinancing at all.
This consolidation allows you to put all your federal loans into one with one-time monthly payment. Students can use the federal repayment programs, deferral, and forbearance, too.
The main disadvantage is that consolidation from the government will not make your interest rate go down. Thus, this is not the best saving strategy. To calculate the interest rate after consolidating a federal student loan, calculate a weighted average of all the interest rates on federal student loans and round it up to 1/8%.
Try Public Service Student Loan Forgiveness
The Public Service Loan Forgiveness program is aimed at helping student loans borrowers, whose federal student loans are included in a federal repayment plan. The borrow has to have the full-time job in an eligible state, federal and local public service job or 501(c)(3) non-profit job. To qualify, teachers have to make 120 payments on-time.
Teacher Student Loan Forgiveness is created for teachers, who work full-time, whose teaching experience is 5 years or more. They should work in a designated secondary or elementary, They can also work in an educational service agency that educates students from the families with the low income. There are also special offers for the nurses to help cope with the student loan.
Elevate Monthly Student Loan Payment
It may seem counter-intuitive and challenging to find additional money to increase your student loan you repay monthly. Yet, interest will accumulate on your principal balance. If you repay more than the minimum balance, this will decrease the student loans cost. If you pay off a student loan early, you will not get any prepayment penalty.
Make Lump-Sum Payment For Student Loan
Another wise strategy is to use a part of your yearly bonuses to make a single lump-sum payment toward the student loans’ principal balance. Ask your student loan servicer to write that you want to use your lump-sum payment for repaying principal only. If you reduce the principal balance at once, it will allow you to save on an interest rate and to repay your student loans quicker.
Try these strategies. We hope that at least one will be suitable for you.