With the total US student loan debt surpassing $1.7 trillion, education debt continues to impact millions of Americans. Borrowers—especially those in medical fields with higher loan amounts—seek effective strategies to manage and eventually eliminate their debt. For many, the possibility of student loan forgiveness offers a path forward, but navigating the complex options can be overwhelming. Read on to learn about some steps borrowers can consider as they manage their student loans.
Step 1: Explore Income-Driven Repayment Plans (IDR)
For borrowers struggling with high monthly payments, Income-Driven Repayment (IDR) plans can offer significant relief. These plans calculate monthly payments based on income and family size, making them more manageable for those with substantial student loan balances. In addition, after 10 to 25 years of qualifying payments, any remaining balance may be forgiven. Laurel Road’s student loan experts can guide borrowers through these options, helping them determine which plan aligns best with their long-term financial goals.
Step 2: Take Advantage of Federal Benefits
Federal student loans come with various benefits that can be important for borrowers to understand fully. The Public Service Loan Forgiveness (PSLF) program is a crucial option for individuals working in qualifying public service jobs, including many healthcare professionals. This program offers forgiveness of student loan debt after ten years of full-time employment at an eligible agency or organization and a total of 120 qualifying monthly payments. Other federal options, such as deferment and forbearance benefits, should be considered as well. These programs allow borrowers to pause payments during periods of financial hardship—but IDR or PSLF can often provide this same relief while also making progress toward forgiveness. Student loan specialists can help borrowers make sense of these federal programs to ensure they are on the right track.
Step 3: Budget Wisely with Proven Strategies
Effective budgeting is crucial for managing student loans while also meeting day-to-day financial needs. The avalanche and snowball methods are popular repayment strategies for borrowers with multiple loans. The avalanche method focuses on paying off loans with the highest interest rates first, reducing the total interest paid over time. The snowball method, on the other hand, targets the smallest debts first, providing quick wins and motivation to tackle larger balances. A popular day-to-day budgeting approach is the 50/30/20 rule, which allocates 50% of income to needs, 30% to wants, and 20% to savings and debt repayment.
Step 4: Consider Refinancing for Better Terms
Refinancing can be a powerful tool for reducing the overall cost of student loans, especially for borrowers with high-interest private loans. By refinancing, borrowers can potentially secure a lower interest rate, reduce monthly payments, or shorten their loan term. Laurel Road provides competitive refinancing options tailored to the unique needs of healthcare professionals, allowing borrowers to customize their repayment plans to fit their financial situation. It is important to carefully weigh the benefits and drawbacks of refinancing, particularly if federal loans are involved, as refinancing into a private loan means losing access to federal benefits, like IDR and PSLF.
Managing Student Loans with Laurel Road
Managing student loan debt is a significant challenge, but financial freedom is within reach with the right strategies and support. By exploring IDR plans, utilizing federal loan benefits, budgeting effectively, and considering all their options, borrowers can take confident steps toward easing the burden of student loans and securing a brighter financial future.
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