7 Student Loan Debt Management Programs With a Passing Grade
Getting a college education can be a very expensive thing. Many students end up borrowing money to cover their tuition and fees. They graduate with a brand-new degree and a bottom-line full of college debt.
The total student loan debt in the United States in 2022 was $1.74 trillion dollars. The only debt that is larger in this country is the amount of money owed on home mortgages. Certainly, most college students would prefer to finance their college educations through Mom and Dad’s checkbook or at the very least scholarships, grants and work-study programs that don’t have to be paid back.
But the truth is many people do look to the federal government or private lenders to pay their educational bills. After graduation, loan repayment is manageable for some people. But for others it is overwhelming. That’s where student loan debt management programs come into play.
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What Is a Student Loan Debt Management Program?
A student loan debt management program is the process of gathering up all student loans and evaluating a strategy for simply paying less money. There are different options for doing that. Some programs refinance existing debt down to a lower interest rate. Some programs look at refinancing one or more loans to lower the monthly payment that is due. Others want to reduce the amount of money that is paid back over the life of the loan or loans.
Some programs round up or consolidate all of a person’s educational debt and streamline it into a single, manageable payment. Others zero in on refinancing specific loans to take advantage of specific lower rates. Here are 7 student loan debt management programs with a passing grade.
Studentaid.gov
If you have federal student debt your first stop should be Studentaid.gov, the government’s official spot for financial aid for students.
Government’s Official
This website is the home of the FAFSA, or the Free Application for Federal Aid Form, that is completed by high school seniors applying to colleges and updated annually. Studentaid.gov offers resources for the entire collegiate financial experience.
Loan Servicer
Right after graduation, there is a grace period of six months for most federally backed student loans. Interest accrues at this time, but payments aren’t due yet. Before payments begin each student borrower is assigned to a loan servicer who is responsible for billing and managing payments on the debt. The loan servicer will automatically set up a standard repayment plan, but the borrower can ask at any time to change the plan. The government’s website has a repayment estimator to help with pre-calculations on loan repayment amounts.
Your loan servicer can set up an income-driven repayment plan to ensure that your loan payments are affordable for you. Your loan servicer can help consolidate your loan debt. In some cases, they can set up a deferment or forbearance that allows you to temporarily stop making loan payments. Interest continues to accrue during the stoppage.
All of the help you receive from your loan servicer is completely free. They will not charge you to assist with your student loan debt management.
The federal government also offers something called Public Service Loan Forgiveness, or PSLF. Borrowers can apply to have their remaining loan balances forgiven after they have made 120 payments in an approved repayment plan and they have worked full-time at a government agency or at a non-profit organization for 10 years. Traditionally, the PSLF acceptance rates have been low. And now because of a lawsuit, the conditions that determine a qualifying government or non-profit employer have become murkier.
Student Loan Planner
Student Loan Planner is an online service that works to match student loan borrowers with loan refinancing deals.
Financial Advisor helps You Refinance the Loan
You pay a one-time fee to be connected with a financial expert who can talk you through ways to pay down debt faster and pay less interest. If you seek additional consultation, you can book it again, for a fixed fee. All of the advisors at Student Loan Planner are either Certified Financial Planners, or CFPS, or Chartered Financial Analysts, or CFAs.
Student Loan Planner’s referral partners will refinance both federal and private student loans. But since their partners are private lenders, the borrower is no longer eligible for things the government offers like income-driven repayment plans, forgiveness or forbearance. Student Loan Planner recommends that each person weigh those options against faster payoff and lower interest.
Student Loan Planner says it is constantly watching the performance of its referral partners by monitoring application acceptance rates and borrower feedback. It claims to help borrowers manage debt from $20,000 to $1 Million. The financial experts at the company believe this is a great time to refinance privately as a tool for student loan debt management. Interest rates are at an all-time high. The yield investors are looking for to cover riskier debt is low. And there is a lot of competition between lenders.
The founder of Student Loan Planner is a CFP who grew the company after he helped his wife and her friends tackle their six-figure college debt.
Credible
Credible is an online site that prides itself on providing extremely quick answers for borrowers looking to refinancing as a strategy for student loan debt management.
Quick Response to Clients
Credible customers fill out a form about themselves and their student loan debt, and within two minutes they are matched with loan information from up to ten lenders. The quotes don’t come back with a range of rates and prices. The borrower can compare the offers side by side to see the total repayment cost, the APR, additional repayment options, and the number of monthly payments. Credible says there is no guarantee results will include a prequalifying loan.
The lender’s Credible works with refinancing both federal and private loans. You don’t have to have graduated to be eligible for this student loan refinancing. Inquiring about refinancing options does not have an impact on your credit score. Credible performs a “soft” credit inquiry at the beginning that does not show up on credit reports. If you accept a lender’s offer, then the company will perform the type of “hard” inquiry that companies do before providing credit.
Credible is a free service for consumers. The preferred lenders pay Credible to be part of their network.
College Ave Student Loans
College Ave Student Loans is another online vendor that matches borrowers with refinancing options in minutes. College Ave suggests that before completing an application, potential buyers secure a copy of their income tax return, check their credit score and identify a potential co-signer.
Tax Return Information
The tax return is necessary because lenders want information about employment and income. Credit scores are available at TransUnion, Experian, and Equifax. College Ave says its lenders are looking for credit scores in the 600s and beyond. And some, but not all loans have to be guaranteed by a co-signer.
Refinancing options are available through College Ave for student loan debt management that ranges from $5000 up to $150,000 for most undergraduate degrees. There are refinancing options available for up to $300,000 for medical, dental, pharmacy, veterinarian, and other doctoral degrees.
College Ave offers several types of repayment options including interest-only payments. Borrowers should keep in mind that paying on the interest-only extends the life of the principle of the loan. Borrowers can catch an even lower interest rate on a refinancing loan if they select to make payments automatically and electronically.
There is also an online calculator on the College Ave site that offers a preview of what refinancing looks like.
Common Bond
Common Bond pairs its investors with borrowers who are looking for a simplified way to refinance college loans with a high level of customer service. Common Bond has an easy online application with quick response time matching customers with investors.
Humanitarian Aspect
Common Bond is a for-profit company with a strong social mission. Each loan that is originated covers the cost of one child’s education in the developing world. Common Bond partners with Pencils of Promise to provide schools, teachers, and technology in Ghana.
Common Bond is also committed to assisting its employees with student loan debt management. Team members receive monthly contributions toward paying off their student loans.
Discover
Discover is more than just a type of credit card. It also offers banking services like private student consolidation loans. The application for the private loan is available on the website.
Discover will refinance federal and private loans. It will also refine existing consolidation loans for educational expenses. You can choose to refinance, one, some or many different loans. Discover will work with debt between $5000 and $150,000, with some exceptions for fields of study.
Discover also offers interest rate deduction if you choose to have the monthly loan payment automatically debited from your account each month.
Things To Know About Refinancing
No matter which tool you use to search for lenders with refinancing options, you have to know to evaluate the information that is returned to you.
What is Refinancing?
Refinancing is when you take one or more existing loans to a lender and replace them with a loan that offers a lower interest rate.
What is Consolidation?
Consolidating loans requires bundling up all of the debt and then rolling it into one loan, presumably one that lowers all of the interest you had been paying on them when they were separate loans. Consolidation streamlines student loan debt management by replacing multiple payments with one simpler payment.
Having one payment instead of several decreases monthly paperwork and bookkeeping which can lead to fewer missed or late payments and a potentially higher credit score.
What is Fixed-Rate Interest?
If you take out a loan you are going to pay interest on the amount that you borrowed. If the lender charges you fixed-rate interest the rate will not change during the life of the loan. The amount of interest is the same on the first day of the loan as it is on the last. Interest rates in our economy are always fluctuating, even if it’s just a tiny bit at a time. Agreeing to a fixed-interest rate protects you from having your interest payments change.
What is Variable Rate Interest?
Variable interest rates fluctuate over time. They are usually tied to a benchmark or index that moves with the economy. If you select a loan with the variable interest you’ll pay less when the interest rates go down. But it works the other way, too, and your interest payments can rise when the benchmark goes up. Usually, the lender will disclose the range for variable interest rates letting you know how low it could go as well as how high it could go.
Length of the Loan
Lenders offer student loans that last for various lengths of time. Some loans are paid in full in five years while others are paid off in 20 years or more. While the payments are spread out across those years, the interest is usually compounded monthly. One very important step to take when evaluating loan terms is to look at the amount of the principle + amount of interest + length of the loan. That is the true amount of what you will have to pay.
Be a Responsible Borrower
Whether you keep your current loans as is, refinance them or consolidate them, it is crucial that you be a responsible borrower and meet your repayment obligations. Making your monthly payments on time will help build your credit and put you in a better situation if you are seeking a car loan or a home mortgage in the future. Don’t assume that just because you feel like you have a better handle on the college debt that you can begin a spending free-for-all. Make sure you are spending within your means and even saving some money as well.
A National Problem
Because the educational debt problem has become so large, most of the candidates in the 2020 Presidential race have a proposal to deal with it. President Donald Trump wants to initiate just one kind of student loan repayment type that calls for up to 12.5 percent of the borrower’s income and completely eliminate the Professional Loan Services Forgiveness program. Democratic candidate Bernie Sanders would like to cancel all outstanding debts owed by students and get rid of college tuition altogether.
Conclusion
Even if you’re shocked by how much you owe, a student loan debt management program is within your reach. Begin by collecting all your documents to see what you have paid and what you owe. Make an honest evaluation of how much money you expect to earn and how much other debt you are paying on as well. Reach out to the large credit monitoring services and see if your score is high enough to qualify for some of the best interest rates.
If you have federal student loans begin by looking at the options the government offers in repayment plans and forgiveness. If you’d like to trade your government backed-loans you can access private lenders through online portals who may have options for you in refinancing one or more loans or rolling all the loans into one lump sum through debt consolidation.
Carefully study the terms lenders offer you taking into account, the original amount owed, the interest rates offered, the difference between a loan with fixed-rate interest and a loan with variable interest and the amount of time it will take to completely pay it all off. Seek out a lender who won’t charge enormous origination fees upfront and won’t penalize you if you are paying extra so that you are done with the loan quicker. Be a responsible borrower. Pay your student loans, pay any other debt you owe, spend wisely and put some money away for the future.