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Student debt hit a new all-time high in the first quarter of 2022, hitting $1.59 trillion, according to data published by the Federal Reserve Bank of New York tuesday.

This category of debt represents just over 10% of total household debt, which is close to $16 trillion. This is the second category of consumer debt, behind mortgages.

The news comes amid rumors that the Biden administration is considering a $10,000 federal student debt forgiveness, and after a further extension of the federal student loan forbearance until August 31. However, private student loans have continued to accrue interest and demand repayment throughout the pandemic, which may partly explain the rise in total debt, although it is only between 7 and 10 percent. of total student debt. In addition, new loans for current and new students add to the total debt.

Whether you have public or private student loans, it’s likely a drain on your overall financial situation. And while the government may take steps to cancel some student loan debt, nothing is guaranteed. Here’s what you can do while you wait.

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Student debt continues to soar, with few solutions

For many Americans, student debt has become an obstacle to financial prosperity and life goals. According to a CNBC + Acorns January 2022 survey led by Momentive.

And the problem continues to be exacerbated, as Fed data indicates total student debt has increased nearly 10% since the third quarter of 2018.

However, some borrowers received relief because Department of Education worked on issues with the government’s student loan forgiveness program. In April, the ministry announced sweeping changes to the program, hoping to immediately cancel more than 40,000 loans for those who met the listed requirements. Recent posts on the Public Service Loan Forgiveness Subreddit show stories of borrowers logging into their portals to find their debts completely cleared.

How to pay off student debt

If you don’t qualify for PSLF or other student loan debt forgiveness, there are ways to pay off your student debt aggressively.

If you currently have public student loans, it is widely agreed to keep your loans in the federal student debt system for now. As long as you have a 0% interest rate and the imminent possibility of a government-mandated pardon, there’s no harm in leaving your debt there for now. In fact, it may be a good idea to pay it back so that all your money goes towards the principal rather than the interest.

However, once interest starts to accrue again, you may consider refinance your student loans. In my own experience, aggressively refinancing the interest rate along with paying off the balance got me out of nearly $80,000 in student debt in less than seven years.

Refinancing your student loans is quite simple and you can get started with a service like SoFi or Road of laurels by checking the rates to which you are entitled. Once you find a rate and repayment plan that fits your budget, you can quickly get your loans processed and refinanced.

SoFi Student Loan Refinance

  • Cost

    No origination fees to refinance

  • Eligible loans

    Federal, private, graduate and undergraduate loans, Parent PLUS loans, medical and dental residency loans

  • Types of loan

  • Variable rates (APR)

    From 2.24%; from 2.37% for resident doctors/dentists (rates include automatic payment reduction of 0.25%)

  • Fixed rates (APR)

    From 2.99%; from 3.12% for resident doctors/dentists (rates include automatic payment reduction of 0.25%)

  • Loan conditions

  • Loan amounts

    From $5,000; more than $10,000 for residential medical/dental loans

  • Minimum credit score

  • Minimum income

  • Authorize a co-signer

Advantages

  • No set-up or set-up fees to refinance
  • Automatic discount of 0.25% already applied
  • Soft credit when you prequalify
  • No prepayment penalties
  • Protections include: protection against unemployment (forbearance offered in 3-month increments, capped at 12 months), Covid forbearance from payments for at least 90 days in the event of financial hardship, loan deferral in the event of return to school, SoFi honors first 6 months of pre-existing grace period on loans seeking refinance
  • Offers monthly payments of $100 during residency
  • SoFi has its own career advisory group to help members look for new jobs
  • Access to live customer support 7 days a week
  • SoFi members get free career coaching, financial advice from planners and more
  • Unique member benefits, such as 0.125% interest discount on any additional SoFi loan product
  • Offers referral program up to $310

The inconvenients

  • No co-signer release option available
  • Minimum loan size of $5,000; more than $10,000 for residential medical/dental loans

Laurel Road Student Loan Refinance

At the Laurel Road secure site

  • Cost

    No origination fees to refinance

  • Eligible loans

    Federal, private, graduate and undergraduate loans, Parent PLUS loans, medical and dental residency/scholarship loans, as well as special prices and reduced rates for healthcare professionals (doctors, dentists, optometrists and assistants medical)

  • Types of loan

  • Variable rates (APR)

    From 1.89%; from 2.28% for resident rates (rates include 0.25% autopay discount)

  • Fixed rates (APR)

    From 2.80%; from 3.08% for resident rates (rates include 0.25% autopay discount)

  • Loan conditions

    5, 7, 10, 15, 20 years (but also offers any term less than 20 years, subject to underwriting criteria)

  • Loan amounts

    For bachelor’s degrees and above, minimum $5,000; for eligible associate’s degrees in healthcare, up to $50,000 in loans for non-ParentPlus refinance loans

  • Minimum credit score

  • Minimum income

  • Authorize a co-signer

Advantages

  • No origination fees to refinance
  • Automatic discount of 0.25% already applied
  • Soft credit when you prequalify
  • No prepayment penalties
  • Protections include: financial hardship forbearance (such as job loss) for one or more 3 month periods (must wait at least 12 months between periods), Covid forbearance of 3 monthly payments (and the ability to request longer), natural disaster forbearance of up to 2 monthly payments, deferral for medical students up to 6 months after their residency and scholarships (the total loan term, including including residency, fellowship and grace period must not exceed 20 years)
  • Medical students only pay $100 per month during their residency program or fellowship
  • Graduates with an associate’s degree in healthcare can refinance
  • Offers referral program up to $400

The inconvenients

  • No co-signer release option available
  • Late payment charges may be imposed if part of a payment is not received within 15 days of the due date: will not exceed 5% of the late payment or $28, whichever is less.
  • May be charged $20 for any payment (including check or electronic payment) that is returned unpaid due to insufficient funds or closed account
  • Minimum loan amount of $5,000

At the end of the line

Student debt continues to grow and isn’t just affecting young people, as Fed data also shows that older Americans are struggling to repay their debt. However, you can take strategic financial action during the federal student loan forbearance period.

If your student debt is currently at 0% or at a low interest rate, you may want to focus on investing for the future. Although I still have $8,000 in student debt at 2.25% APR through a personal line of credit, the few dollars a month I pay in interest per month should be worth the gains I see on my investments. So if your interest rate is manageable, consider doing the math on what would make more sense.

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Editorial note: Any opinions, analyses, criticisms or recommendations expressed in this article are those of Select’s editorial staff alone and have not been reviewed, endorsed or otherwise endorsed by any third party.

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