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Student Loans: Your Repayment Options

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Student Loans: Your Repayment Options

The Student Debt Conversation


Sharing with your partner how much you owe in student loans can be incredibly hard. Significant student debt can trigger feelings of shame, guilt, or embarrassment. The fear of being judged, misunderstood, or rejected by a partner adds another layer of complexity to the conversation. 


Student debt might impact the dynamics of the relationship, including decisions about shared finances, long-term goals, and whether to move forward in a marriage. Nevertheless, entering into a marriage with full transparency is necessary. 


Think through the best time to meet with your spouse or fiancé. Talking on a weekend morning in a private setting is usually best. Make a commitment to talk and keep the conversation distraction-free. 


Learning about your partner's debt can be emotionally difficult. Be careful not to pass judgment too quickly. Empathize with your partner and try to understand their emotions. Be gracious to one another. You can't construct a plan to work together to eliminate student loans until you commit to working through the emotions of the debt together.


 


 

Student Debt Repayment Options


Federal Student Loans


Federal student loans are funded by the federal government. Compared to private student loans, federal student loans offer several repayment advantages. 


Individuals can choose from various repayment options tailored to their specific financial circumstances, such as income-driven repayment plans. There are options for deferment or forbearance in case of unexpected financial setbacks. Some federal student loans offer forgiveness programs for those working in public service or non-profit sectors. 


Federal student loan repayment programs are continually evolving. Visit the U.S. Department of Education Student Aid page for the most current information. 


Federal Student Loan Repayment Simulator


The Federal Student Loan Simulator helps you estimate monthly student loan payments and choose a loan repayment option that best meets your needs and goals. You can also use it to decide whether to consolidate your student loans.


Student Loan Forgiveness and Repayment plans


Federal student loan forgiveness programs and repayment plans continually evolve and are central to political debates. Visit the appropriate U.S. Department of Education page for the most current information. 



Private Student Loans


Unlike federal loans, banks, credit unions, and online lenders offer private loans. They typically have fewer borrower protections. 


Private student loans typically have higher interest rates than federal loans, and the interest is usually accrued while you are in college. They usually lack the flexible repayment plans of federal loans.


Calculating the Cost of Repayment Options


The Fundamentals


There are two fundamentals to keep in mind to understand the cost of a student loan. 


  • The longer the repayment period, the more that is paid in interest. 

  • The higher the interest rate, the more that is paid in interest. 


We used a student loan calculator to calculate the average student loan amounts for undergraduate and graduate school loans. Look carefully, and you’ll see that the difference in repayment methods could cost borrowers more than twice as much. 


Undergraduate school loans

Student Loans: Your Repayment Options

Graduate school loans

Student Loans: Your Repayment Options

Federal Student Loan Repayment Options


Loan Simulator helps you estimate monthly student loan payments and choose a loan repayment option that best meets your needs and goals. You can also use it to decide whether to consolidate your student loans.


Calculate Your Federal Student Loan Repayment Options with Loan Simulator


Debt Reduction Strategies


Avalanche Method


You pay off your highest interest rate loans first when repaying your debt using the avalanche method. If you pay off that loan, the money you saved goes to the account with the highest interest rate. This process is then repeated.


If you stick to this method, you'll be able to pay off your loans the fastest and most efficiently. However, the avalanche method can feel discouraging if the first loan has a high balance and isn't repaid quickly.


Snowball Method


With the snowball debt repayment method, you pay off the loan with the smallest balance first. Once that debt is paid, the money you were putting toward it gets rolled over to the next-smallest debt.


Your first debt will be eliminated more quickly and you'll stay motivated when you pay off the smallest debt first. The downside to this method is that it is the slowest and most expensive.


Hybrid Method


Use the snowball method to pay off the loan with the smallest balance first. Switch to the avalanche method once you have gained the confidence you need to carry out the plan. 


Read How to pay down debts with your spouse for a more detailed explanation.


Consolidation and Refinancing


Student loan consolidation can benefit some student loan borrowers. Here are some potential benefits. 


  • The consolidation of federal student loans can greatly simplify loan repayment by giving you a single loan with one monthly payment.

  • If you currently have variable interest rates, consolidating those loans will give you a fixed interest rate.

  • A consolidation of loans other than Direct Loans could result in additional income-driven repayment options and Public Service Loan Forgiveness.

Consolidation has potential downsides, too:


  • Consolidation can lengthen your repayment period, meaning you might pay more interest.

  • The interest you owe on any loans you consolidate will be added to your new consolidation loan's original principal balance, so interest might accrue on a higher original balance than if you had kept your loans separate.

  • If you cancel your current loan, you may lose benefits such as interest rate discounts, principal rebates, or loan cancellation benefits.

  • Consolidating your current loans could result in you losing credit for payments made toward income-driven repayment plans and Public Service Loan Forgiveness.

Consult a professional before deciding to consolidate your student loans. 


Professional Support 


Student Loan Planner



Student Loan Planner is a specialized service dedicated to helping individuals manage and optimize their student loan repayment journey. By offering personalized consultations and expert advice, this platform assists borrowers in creating customized repayment plans.


Student Loan Planner analyzes various repayment options, including refinancing, consolidation, and forgiveness programs, to minimize loan costs and maximize savings, ultimately guiding individuals toward more manageable and efficient debt-reduction plans.



Consumer Financial Protection Bureau (CFPB)



Transition to Marriage Toolkit


This post is a glimpse into what to expect if you purchase the Transition to Marriage Toolkit. The backgrounds of the 50+ national content experts who contributed to the Toolkit are below:


Designed for engaged and recently married couples, it is the ideal resource for those who want to manage money and the home as a team.



 

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