4 Strategies for reducing student loans

2 MIN READ | #blog

College was fun. But now the bill has come due. Americans owe nearly $1.75 trillion in student loan debt, spread out among about 48 million borrowers.1 The debt burden college graduates have is a substantial obstacle to personal financial progress, but you likely already know that. There are strategies you may want to consider to lighten the weight.

Look into public service loan forgiveness

For people working in government, non-profit, and other public service jobs, certain federal loans may be forgiven after 10 years of qualifying payments. Many individuals are not even aware that they qualify for the program.


There are a number of programs, such AmeriCorps, the Peace Corps, and military service, whereby such service will accrue a benefit that reduces an outstanding loan balance. The amount varies with each program.

See if you qualify for an income-based repayment plan

Your payments on eligible federal loans can be capped at a percentage of your income if you have a partial financial hardship, which is defined as monthly repayment amounts in excess of the level calculated under a 10-year standard repayment plan. If you make such payments and meet other requirements, any remaining balance will be forgiven after 25 years of qualifying

Pre-pay principal

Prepayment of principal will help lower the lifetime interest costs of a loan. Of course, the challenge for many young workers is that they may not have the cash flow to make prepayments.

Consider ways to raise cash specifically for such prepayments. Do you still receive birthday and holiday presents? Ask for cash instead. Did you receive a raise, bonus, or overtime pay? Direct these unexpected cash flows to prepayments.

Student debt can be overwhelming. It may seem, at times, like you’ll never get past it. Don’t despair. Remember, time is in your favor. As you gain work experience, the economy improves, and Baby Boomers retire, opportunities for economic advancement will emerge and help you move ahead.

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1 https://studentloanhero.com/student-loan-debt-statistics/


Guardian does not issue nor advise for student loans.