4 Popular Ways to Approach Student Loans

Graduating from college is both exciting and a little scary! New graduates move into a new era of their lives, when they need to establish their careers, their adult social lives, and their financial future. The truth is, though, that many new graduates find themselves in the position of having to pay for the past (in the form of student loans) before they can start pouring their new salaries into their future. The average graduate of the class of 2017 owes $28,650 in student loan debt. Nationally, 44 million Americans owe $1.5 trillion in student loan debt. The average monthly payment for people with student loan debt is between $200 and $300 dollars a month, and the average payoff time is ten years. The media publishes a lot of stories about the student loan debt crisis. Here’s a common student loan story: A student borrows $24,000, but after paying back $18,000, they still owe $24,000. How can you pay off your student loans effectively and eventually retire the debt altogether? You need a plan.

Figure Out What You Owe

Your first step has to be to figure out exactly how much you owe. You need to know the original balance, the current balance, and the interest rate for each loan you took out. How do you find out this information? The government runs a clearinghouse website with information about federal student loans. If you think you have private student loans but can’t find your paperwork, contact your school’s financial aid office: If the loan was disbursed directly to the school, they should have the information. Otherwise, your best bet is to pull your credit report. The companies servicing your loans should be listed on your report. You’re entitled to one free credit report a year. Be aware that both your federal and private student loans can be sold to other lenders at any time, so you need to be sure to keep good copies of your loan information. Occasionally, the loans are sold twice or sold with inaccurate information. If you feel like your student loans could have fallen victim to this, reach out to the lender.

Pay More Than the Minimum

Let’s say you borrowed the 2017 average, $28,650. With a 6% fixed interest rate, you will pay $9,518 in interest over ten years (assuming all of your loans have the same interest rate; in the real world, that rarely happens). Now, let’s say you find an extra $50 a month to throw at your loans. Now, you will only pay $7,730 in interest and will pay your loans off 21 months early. If you can throw an extra $100 a month at your loans, you’ll save another thousand dollars in interest and pay off your loans three years earlier! Try inputting your numbers into this student loan calculator and see how putting a little extra money toward your loans will save you money.

If you struggle to pay your loans at all, federal loans also offer student loan deferment and forbearance for the times when you really can’t pay. However, side hustles like dog-walking or babysitting, freelance work, and selling secondhand items online are popular methods for making extra money to devote to paying down your student loan debt.

Try the Avalanche Method

Remember when I mentioned that you might have student loans with different interest rates? The avalanche method dictates that you put any extra money toward the loan with the highest interest rate. So let’s once more assume that you’re an average borrower with a total debt of $28,650 and you borrowed an equal amount all four years of undergraduate schooling, so $7,165 a year. Your highest-interest loan is 8%, with a minimum payment of $86.93. Along with that minimum payment, you send $50 a month (you also send the minimum payment on the other three loans, of course!). Sending that extra $50 a month lets you pay off your highest-interest loan four and a half years early and saves you more than $1,500 in interest. Now, you take the extra $50 plus the minimum payment of the paid-off loan and pay that $136.93 toward the loan with the second-highest interest rate. Once the second loan is paid off, you add the minimum payment from that loan and the $136.93 to your third loan’s payments, and so on until you are free from student debt!

Refinance or Consolidate Your Student Loans

Refinancing student loans can make a lot of sense for people who have an unreasonably high interest rate, a variable interest rate on at least one of their loans, or a combination of federal and private loans. If you have a steady job and good credit, you should be able to refinance your loans into one loan with a lower interest rate. By refinancing federal loans with a private lender, you do lose some protection, like the ability to put your loans into forbearance or deferment. People with federal loans can also opt to consolidate their federal loans instead of refinancing them. Consolidation is free, removes variable interest rates, and averages out your interest rates. You are allowed to consolidate some or all of your loans. If you think you might qualify for student loan forgiveness, though, you’ll want to thoroughly understand the requirements before you begin refinancing or consolidating your loans.

1 Title-Secured Loans, Secured LOCs and Title Pawns: Maximum pledge amount in Mississippi is $2,500. Maximum loan amount in Tennessee is $6,500, assuming customer qualifies for and accepts both the pledge max of $2,500 and Secured LOC max of $4,000. Refinancing is not available for Mississippi or Tennessee Pledge products. Minimum loan amount for title-secured loans in South Carolina is $601.

Must be at least 18 years of age (19 in Alabama). Account approval requires satisfaction of all eligibility requirements, including a credit inquiry and motor vehicle appraisal. Must present valid government issued ID. Certain other eligibility requirements and terms & conditions apply. Loan/LOC/Pawn amounts vary by states and product. LOC customers are subject to a periodic collateral review to maintain credit limit. Proof of income documentation and ability to repay analysis is required in Missouri, Nevada, some Texas locations, and Utah.

2 Personal Unsecured Loans/LOCs: Unsecured loan amounts and products not available in all stores/states. Max loan amount for first time borrowers is $1,000 ($500 for an in-store personal loan in AZ). Returning customers with a good payment history may qualify for higher loan amounts, currently up to $2,500. Loans above $1,000 ($500 for an in-store personal loan in AZ) require two consecutive pay stubs showing direct deposit. In-Store: Account approval requires satisfaction of all eligibility requirements, including a credit inquiry. Bring in proof of income (dated within the last 30 days), active bank account details (dated within the last 45 days), proof of residency, a voided check, and a valid government-issued ID to apply. In AZ, a valid AZ motor vehicle registration in your name is also required. Min $601 in SC. Without SSN or ITIN, max loan amount is $300. Online: If you do not have an SSN or ITIN, please visit us in store to apply. Additional items required for eligibility, including: a valid and active email address and telephone number, a valid SSN, and proof of residency for the state in which you are applying (currently AZ, DE, KS, MO, MS, SC, TN, TX, UT or WI). Min $610 in SC. Certain other terms and conditions may apply.

– California, Illinois and Virginia Residents: TitleMax® no longer originates new loans in CA, IL or VA, but continues to service existing loans.

– Please see our California Resident Notice at Collection and Privacy Policy: Submit a Verified Consumer Request to understand what information we collect, disclose, or sell, to request that we delete your information, and/or opt out of selling by clicking Do Not Sell My Personal Information.

– In Georgia, TitleMax offers Title Pawns.

– New Mexico Consumers: please see important New Mexico Consumer Information and Disclosures.

– In Nevada, title loans should be used for short-term financial needs only and not as a long-term financial solution. Customers with credit difficulties should seek credit counseling before entering into any title loan transaction. Ability to repay analysis with income documentation required.

– In Tennessee, TitleMax offers title pledges, and secured and unsecured Lines of Credit (“LOC”). Only one LOC account allowed per customer, inclusive of other lenders. LOC customers are subject to a periodic income (and collateral, if applicable) review/validation.

– TitleMax of Texas, Inc. and TitleMax Online of Texas, Inc., d/b/a TitleMax acts as Credit Services Organizations to assist customers in obtaining a loan through an unaffiliated third-party lender. Please see store associate for details. Please see Texas Schedule of All Fees. TitleMax does not offer pawn loans or pawn transactions in Texas.

– TitleMax®, TitleBucks®, and InstaLoan®, are not considered competitors. Please see a store associate for details.

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