How to Pay Off $70,000 in Student Loans

How to Pay Off $70,000 in Student Loans.

There are several strategies that could help you pay off $70,000 in student loans, such as refinancing or signing up for an income-driven repayment plan.

While the average student loan debt for college students is $39,351, some students might end up leaving school with $70,000 or more in student loans.

Paying off this amount in student loans can feel overwhelming. For example, if you had $70,000 in federal student loans and made payments under the standard 10-year repayment plan with a 6.22% interest rate, you’d end up with a monthly payment of $785 and a total repayment cost of $94,188.

• READ ALSO: Refinance Programs for Seniors

Thankfully, there are several strategies that could help you more easily manage $70,000 in student loans.

Here’s how to pay off $70,000 in student loans:

1. Refinance your student loans
2. Consider using a cosigner when refinancing
3. Explore income-driven repayment plans
4. Pursue loan forgiveness for federal student loans
5. Adopt the debt avalanche or debt snowball method

1. Refinance your student loans

Student loan refinancing is the process of paying off your old loans with a new loan. Depending on your credit, you might get a lower interest rate through refinancing, which could save you money on interest and even potentially help you pay off your loans faster.

Or you could opt to extend your repayment term to reduce your monthly payments and lessen the strain on your budget — though keep in mind that this means you’ll pay more in interest over time.

Keep in mind: You can refinance both federal and private loans. However, refinancing your federal student loans will cost you access to federal benefits and protections — such as income-driven repayment plans and student loan forgiveness programs.

Keep in mind: You can refinance both federal and private loans. However, refinancing your federal student loans will cost you access to federal benefits and protections — such as income-driven repayment plans and student loan forgiveness programs.

2. Consider using a cosigner when refinancing

You’ll typically need good to excellent credit to get approved for refinancing — a good credit score is usually considered to be 700 or higher. There are also several lenders that offer refinancing for bad credit, but these loans tend to come with higher rates compared to good credit loans.

If you have poor or fair credit and are struggling to get approved, consider applying with a cosigner. Even if you don’t need a cosigner to qualify, having one could get you a lower interest rate than you’d get on your own.

Tip: A cosigner can be anyone with good credit — such as a parent, another relative, or a trusted friend — who is willing to share responsibility for the loan. Just keep in mind that this means they’ll be on the hook if you can’t make your payments.

3. Explore income-driven repayment plans

If you have federal student loans, signing up for an income-driven repayment (IDR) plan could be a good idea. On an IDR plan, your payments are based on your income — typically 10% to 20% of your discretionary income.

Additionally, you could have any remaining balance after 20 to 25 years, depending on the plan.

Tip: Signing up for an IDR plan might significantly reduce your monthly payments. However, keep in mind that by extending your repayment term, you could end up paying much more in interest over time.

Here’s how the four main IDR plans compare to a few other federal repayment plan options:

Repayment plan	Who’s eligible?	Monthly payment	Repayment terms	Eligible for loan forgiveness?
Standard repayment plan	Any borrower with Direct or FFEL Loans	Amount when payments are spread equally over 10 years (usually $50 minimum)	10 years	No
Graduated repayment plan	Any borrower with Direct or FFEL Loans	Depends on loan amount (payments start low and increase every 2 years)	10 years	No
Extended repayment plan	Any borrower with more than $30,000 in Direct or FFEL Loans	Fixed: Spread evenly over up to 25 years Graduated: Depends on loan amount (start low and increase every 2 years)	Up to 25 years	No
Income-Based Repayment (IBR)	Borrowers with partial financial hardship (no Parent PLUS Loans)	For borrowers who took out loans after July 1, 2014: 10% of discretionary income (never more than 10-year plan)For borrowers who took out loans before July 1, 2014: 15% of discretionary income (never more than 10-year plan)	For borrowers who took out loans after July 1, 2014: 20 years For borrowers who took out loans before July 1, 2014: 25 years	Yes
Pay As You Earn (PAYE)	Must have partial financial hardship Must have borrowed on or after Oct. 1, 2007	10% of discretionary income (never more than 10-year plan)	20 years	Yes
Revised Pay As You Earn (REPAYE)	Any borrower (no Parent PLUS Loans)	10% of discretionary income (no cap)	20 years (25 years if repaying grad school debt)	Yes
Income Contingent Repayment (ICR)	Any borrower (Parent PLUS Loans must be consolidated)	20% of discretionary income (or income-adjusted payment on 12-year plan)	25 years	Yes

4. Pursue loan forgiveness for federal student loans

There are several student loan forgiveness programs available to federal student loan borrowers. Most of these require that you work in a certain field and make qualifying payments for a specific amount of time. Continue Reading Here

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source: credible.com