You’re not alone if the crushing weight of student loan debt is starting to get too heavy. But here’s the deal: you don’t have to feel powerless. Let’s break down five common approaches to help you take back your power and tackle your student loan debt in a way that makes sense for you.
Income-Driven Repayment Plans
If you have federal loans, look into the IDR (income-driven repayment) plans. These plans are designed to make your monthly payments affordable by capping them at a percentage of your discretionary income. While the monthly payments are lower, you’re often paying more interest over the life of the loan.
Still, this can be a massive relief for those who need a more flexible option, even if it’s just temporary. It can also take a long time to get to forgiveness, and you’ll need to recertify your income and family size every year to stay on the plan.
Refinancing
Refinancing involves working with a lender to pay off existing loans and replace them with a single new one. This is often one of the better options if you have solid credit and a stable income. It’ll also likely net you a lower interest rate, saving you money over time.
That said, it also means that you’re giving up a lot of the safety nets that come with federal loans, including access to an IDR plan and forbearance, so it’s not a decision you want to make without a lot of consideration.
Employer Student Loan Assistance
Not every employer offers this, but it’s a growing benefit that you should absolutely take advantage of if it’s available to you. To attract and retain talent, some employers are now offering to help their employees pay down their student loans.
This can be a huge perk, as it’s essentially “free money” to help you get out of debt faster. There’s no real downside to this approach; it’s just that it’s not very widespread, so fewer people will have this as an avenue for helping them pay off debt.
Federal Loan Consolidation
Federal loan consolidation and refinancing are different, though they’re similar in concept. Consolidation also narrows your debt into a single loan, but it won’t necessarily give you a better interest rate.
The real benefit is the simplicity; it’s much easier to manage one loan than a bunch of different ones. It also doesn’t take away your eligibility for IDR like refinancing would, though it can extend the life of your loan the same as IDR does.
The Standard Option
The standard repayment plan is what most people default to, but it’s important to know what makes it a good (or not-so-good) option. The main benefit you’ll get from this is predictability: you’ll know exactly what you owe each month, making budgeting relatively straightforward compared to other payment options.
However, those with large amounts of debt and lower or variable income might find it impossible to keep up with the high monthly payments, especially right after graduation when they’re still trying to find their footing.
