If, like many people, you took out loans to pay for your education, the thought of someday paying them off may seem daunting. Each month you make a payment but the loan amount never seems to go down. However, according to USA Today, there are ways to manage your student loan debtthat can alleviate some of the burden and help you get your loans paid off.
Much as many homeowners refinance their mortgages in order to save money and get a lower interest rate, your student loan can also be refinanced. However, many federal loans have protections for borrowers. If you get sick or lose your job, you may have options such as forbearance or deferment, which are offered by the government.
Paying off a federal loan with a private one is a risky move, but may be worthwhile if your goal is to save money and get your loan paid off quicker. You can pay off federal loans with these private loans, if you can find one with a lower interest rate. Doing so will give you a lower monthly payment going forward and will save you money on interest over time.
Another option is to switch your loans to an income-driven repayment plan. While this method actually costs you more in interest over time, it makes the debt more manageable since you know you will never have to pay more than you can afford to each month. Furthermore, the balance of your loan may be forgiven at the end of the time period if you continuously make payments at that amount for a specified time. With this type of plan, your income is used as the starting point and then a percentage cap is applied to determine your monthly payment.