Category: Repayment

The average individual with a Masters in Social Work has around $68,000 to $76,000 in student loan debt. If you’re in the same boat, you’re not alone. To relieve the burden of student loan debt, consider pursuing loan forgiveness for social workers. Many federal forgiveness programs support individuals who work in public service, including social workers. 

National Programs

The following loan forgiveness programs are for federal student loans only. 

Public Service Loan Forgiveness

Public Service Loan Forgiveness (PSLF) is a loan forgiveness program for individuals who work in public service, including social workers, teachers, nurses, and more. If you have, or plan to have, more than 10 years of full-time employment in public service and have made 120 qualifying monthly payments to your federal student loans, you may be eligible for PSLF.

You must complete the PSLF application to qualify.

National Health Services Corp Loan Repayment Programs

If you are a licensed clinical social worker, you may qualify for one of the National Health Services Corp’s three loan repayment programs:

National Health Services Corp Loan Repayment Program: For licensed primary care clinicians who serve at least two years of service at an approved site in a Health Professional Shortage Area.

National Health Services Corp Substance Use Disorder Workforce Loan Repayment Program: For health professionals who serve in a Health Professional Shortage Area and improve access to Substance Use Disorder.

NHSC Rural Community Loan Repayment Program: For health providers who work against the opioid epidemic in an approved rural community.

Perkins Loan Cancellation

Public service workers who have taken out Perkins loans before 2017 might be eligible for Perkins Loan cancellation. To verify whether you are eligible, reach out to your school’s financial aid office for the next steps.

Income-Based Repayment Forgiveness

Beyond federal student loan forgiveness programs, social workers can also take advantage of income-based repayment forgiveness.

The following income-based repayment programs are eligible for loan forgiveness:

• Pay As You Earn (PAYE)
• Revised Pay As You Earn (REPAYE)
• Income-Based Repayment (IBR)
• Income-Contingent Repayment (ICR)
  

If you make 20-25 years’ worth of repayments on any of the aforementioned repayment plans, you may be eligible for the rest of your loan balance to be wiped out.

State-Based Programs

Each U.S. state offers at least one state-specific student loan forgiveness program, which social workers may be able to take advantage of.

For example, Kentucky has a 50/50 matching loan repayment program for healthcare providers who serve in underserved and rural areas. In New York, licensed social workers who work in critical human services areas can get up to $26,000 shaved off of their loans.

Other Ways to Find Relief

Beyond student loan forgiveness programs, you can find student loan relief through other means, such as student loan refinancing. 

Student loan refinancing is the process of taking out a new loan, preferably with better terms, to replace your current loan. The new loan can have a lower interest rate or monthly payment to help make the loan more affordable. Here is a list of the top student loan refinance rates. In just three minutes, you can compare real and personalized student loan refinancing rates from 17+ lenders – for free – by using the Sparrow application.

For example, let’s say you have a student loan for $10,000 with a 10% interest rate and a repayment plan for 5 years. With your current plan, you pay $2,748.23 in interest. If you refinance your loan to have a 5% interest rate, you pay a total of $1,322.74 in interest, saving you around $1,400 in total.

To explore student loan refinancing offers, complete the free Sparrow application.

Being a military spouse requires a level of sacrifice some may never understand, and oftentimes placing your career on hold is one of them. While sometimes necessary to keep up with a life of frequent moves, it can create additional challenges when it comes to paying off student loans. That’s why it’s important to know your military spouse student loan forgiveness options.

Can Military Spouses Get Student Loans Forgiven?

Currently, there are no student loan forgiveness programs designed specifically for military spouses. However, military spouses can still receive loan forgiveness through conventional federal forgiveness programs. 

Other Ways to Find Student Loan Relief

Public Service Loan Forgiveness

Public Service Loan Forgiveness (PSLF) is a student loan forgiveness program for individuals who work in the public sector, such as:

• Teaches
• Doctors
• Military Servicemen
• Non-profit Employees
• Government Workers

To determine whether your occupation qualifies as public service, consider using the PSLF help tool. If you think you qualify, fill out the Public Service Loan Forgiveness & Temporary Expanded PSLF Certification and Application.

Teacher and Nurse Loan Forgiveness

If you’re a teacher or nurse, you have additional options. The following are programs to consider:

Student Loan Forgiveness Program	Who’s Eligible?	Details
Public Service Loan Forgiveness	For both teachers and nurses.	Must have worked in public service and made 10 years’ worth of on-time loan payments on Direct loans.
Perkins Loan Cancellation	For both teachers and nurses.	Must be a full-time nurse or a teacher who works in a designated school. Must have borrowed a Perkins Loan before 2017.
Teacher Loan Forgiveness	For teachers only.	For full-time teachers who have taught for 5 consecutive years at a low-income school or educational agency. If you taught secondary-level mathematics or science, or were a special education teacher, you can be eligible for up to $17,500 in loan forgiveness. All other subjects can receive up to $5,000 in loan forgiveness.
Nurse Corps Loan Repayment Program	For nurses only.	For registered nurses, nurse faculty, or advanced practice registered nurses who have attended a qualifying nursing school and work in a critical shortage facility or accredited nursing school. Recipients can receive up to 85% of their nursing loans forgiven.
National Health Service Corps Loan Repayment Program	For nurses only.	For nurses who work in Medicare, Medicaid, or the State Children’s Health Insurance Program. Full-time nurses can receive up to $50,000 in loan forgiveness, while half-time nurses can receive up to $25,000.

Servicemembers Civil Relief Act

The Servicemembers’ Civil Relief Act allows military spouses to lower the interest rate on their loans to 6%, if the loan was borrowed before the service member entered active duty. While this program is not loan forgiveness, it can help lower your monthly payments. Qualifying service members include those in the Army, Navy, Air Force, Marine Corps, Coast Corps, reservists on active duty, and more. 

Student Loan Refinancing

Student loan refinancing allows you to swap your current loan for one with a better interest rate or terms. In some cases, this can help lower your monthly payments, making keeping up with them a bit easier.

If you have federal loans that do not qualify for loan forgiveness, you can sometimes consolidate them to a qualifying loan type. For example, if you have Federal Family Education loans (FFEL), which do not qualify for federal loan forgiveness, you can consolidate them into a Direct loan. 

Here is a list of some of the best refinance rates for student loans: Rather than searching for lenders one-by-one, we recommend starting the process with an automated student loan refinance search tool. After you complete the free Sparrow application, we’ll show you the rates and terms you’d qualify for with 17+ premier lenders. 

Income-Driven Repayment Forgiveness

Income-driven repayment is a federal loan repayment plan that bases your monthly payment based on your income. After making 20-25 years’ worth of qualifying payments, your remaining student loan balance can be forgiven

State-Sponsored Assistance Programs

Some states offer loan assistance programs for their residents. For example, Iowa offers the Teach Iowa Scholars program, which provides qualifying first-year Iowa teachers with $4,000 per year for teaching in designated shortage areas. New York offers qualifying social workers up to $26,000 in loan assistance through the NYS Licensed Social Worker Loan Forgiveness program.

Closing Thoughts From the Nest

As a military spouse looking for loan forgiveness options, be sure to exhaust all options available to you. While there are no specific loan forgiveness options for military spouses, there are plenty of programs you can still take advantage of.

If you owe more than 6-figures in student loans, you may feel overwhelmed by your debt. However, you’re not alone. In 2021, there were around 900,000 borrowers who owed $200,000 or more in student loans.

If you want to learn how to pay off $200k in student loans fast, you’re in the right place. Keep reading for the best strategies to wipe out your student loan debt balance.

Look for Student Loan Forgiveness Opportunities

Before finding ways you can pay off $200k in student loans using your hard-earned cash, you should always look for free money first. Exploring student loan forgiveness opportunities is key.

If you borrowed federal student loans, you may be eligible for student loan forgiveness. Here’s a few programs that you should explore:

Public Service Loan Forgiveness

The Public Service Loan Forgiveness program is for federal loan borrowers who work in the public sector. Whether you’re a volunteer, teacher, or nurse, you may be eligible for student loan forgiveness if you work for a qualifying U.S. federal, state, or local employer.

Here are some common professions that qualify for Public Service Loan Forgiveness:

• Non-profit 
• Government
• Lawyers
• AmeriCorps 
• Peace Corps
• Medical field

Loan Forgiveness Through Repayment Plans

Depending on your loan type, repayment plan, and the number of loan payments you’ve made, you may be able to have your student loans forgiven. If you have the Income-Based Repayment Plan, Pay As You Earn (PAYE) Plan, Income-Contingent Repayment Plan, or the Revised Pay As You Earn (REPAYE) Plan, you can qualify for loan forgiveness if you have made on-time and in-full payments for a specified amount of time.

Occupation-Based Loan Forgiveness

If you are in the Army National Guard, AmeriCorps VISTA, AmeriCorps State, or AmeriCorps NCCC, you may qualify for specialized loan forgiveness. Military service members can qualify for Public Service Loan Forgiveness, National Defense Student Loan Discharge, and more.  Reach out to your military organization to see what student loan forgiveness options you may have.

If you are a public school teacher who works for an eligible school, you may also be eligible for loan forgiveness. Generally, you need to have taught at a low-income school and made a minimum of 120 full and on-time payments. Some programs that you can look into are the Public Service Loan Forgiveness, Teacher Loan Forgiveness, and Perkins Loan Cancellation.

Borrower Defense

If you believe you were scammed or defrauded by your school and can prove it, you may be eligible to have your student loan balance wiped out entirely. You’ll need to file a claim with the Department of Education with evidence that you were deceived or misled by your school. 

Refinance to a Lower Interest Rate

Before looking into student loan refinancing options, double-check that you do not have any opportunities for student loan forgiveness. If you refinance your student loans, you may lose eligibility for loan forgiveness in the future. 

Loan refinancing is when you swap out your current loan with a new loan to pay off your debt. Generally, the new loan should have more favorable terms, such as a lower interest rate or monthly payment. This, in turn, can help you pay off your loans faster and save you money on interest.

Cut Back Expenses or Pick Up A Side Hustle

To pay off $200k in student loans, you can either increase how much you earn, reduce how much you spend, or do both. Generally, it is difficult for borrowers to cut back their expenses and pick up a side hustle, so don’t stress if that is you. Choose the strategy that works best for you.

If you’re hustling hard and looking for creative ideas to cut back on expenses or make more money, consider the following:

1. Do you have any paid subscriptions you forgot about? Try using a software like Rocket Money to catch any subscriptions you might be paying for without knowing it.
2. When was the last time you negotiated your bills? If it’s been more than a year, it’s time to call.
3. When was the last time you discussed your salary with your boss? While it might be an awkward conversation to have, it’s definitely in your right to talk about a pay raise.
4. Use Upside when purchasing gas. Not only will it tell you where the cheapest gas prices are, but it’ll give you cash back for purchasing gas (which is often a necessary expense for most individuals).

If you do not have any expenses to cut out, consider picking up a side hustle. Whether you decide to pick up a second job or explore freelance work, anything that brings an additional stream of income will help you.

Look at Your Company’s Benefits

Believe it or not, some employers will give you extra money to pay off your student loan debt. Reach out to your employer’s HR office and ask about any student loan payoff benefits they may offer. Or, if you’re applying for a new job, add in student loan repayment benefits when negotiating your salary and compensation package. 

Use the Debt Avalanche Method

The debt avalanche is a popular method to tackle student loan debt. When using the debt avalanche method, you:

1. Pay the minimum payment for all of your outstanding debt, and;
2. Use your remaining money to pay off your debt with the highest interest rate.

The idea behind the debt avalanche method is to target your debt with the highest interest rate so you can spend less on interest in the long run.

For example, let’s say you are currently paying off three student loans: one of them has an interest rate of 10%, one has an interest rate of 7%, and the last one has an interest rate of 5%. 

Using the debt avalanche method, you would pay off the minimum amounts for all of the loans, while directing any extra money to the loan with a 10% interest rate. 

After the student loan with the 10% interest rate is entirely paid off, you would begin directing all of your money to the loan with the 7% interest rate, while making minimum payments on both the 5% and 7% loan.

How Long Will It Take to Pay Off?

To calculate how long it would take you to pay off $200k in student loans, you can use a student loan calculator. Student loan calculators allow you to adjust your monthly payment in different scenarios, allowing you to see how long different repayment plans would take. 

Closing Thoughts From the Nest

While paying off $200k in student loans may seem like a daunting goal, it is definitely possible. By researching your options and being financially pragmatic, your student loan debt is something that you can overcome.

While there are both drawbacks and benefits of paying off student loans early, the decision ultimately depends on your financial priorities and standing.

Should I Pay Off Student Loans Early?

Ask yourself the following questions:

#1: Do you have at least 3-6 months’ worth of emergency funds?

Having a rainy-day fund that can last you roughly 3-6 months is crucial in being prepared for unexpected circumstances. Before directing your extra money to pay off your student loans, make sure you are financially prepared for any emergencies. 

#2: Are you saving for retirement?

While retirement may seem far away, investing in your retirement while young is crucial to having long-term financial security. If your retirement fund is lacking, consider prioritizing it first. 

Once you’re in the position to pay off your student loans while still adding to your retirement fund, then you may want to start directing some extra money to your student loan payments. 

#3: Have you paid off all high-interest debt?

High-interest debt is extremely volatile, as the initial amount of money you borrowed can quickly grow larger. Any high-interest debt you have should be a priority to pay off so that the consequences of compound interest do not work against you. 

#4: Do you have a “sufficient” income?

If you are able to comfortably make larger student loan payments, you’re in a good spot to pay off your loans early. However, if doing so will place some strain on your financial situation, it might not be the best idea. You’ll want to be able to meet your basic expenses like your bills, rent, and car payments first.

Benefits and Downsides of Paying Off Student Loans Early

Before making your final decision, carefully weigh the pros and cons. 

Benefits of Paying Off Student Loans Early

Save Money on Interest

Student loans collect interest over time. If you pay off your student loans early, you’ll pay less in interest, saving more money overall. 

For example, let’s say you have a loan of $10,000 with a 5% interest rate and a 10-year repayment plan. If you opted to pay off the loan early by adding an extra $200 to your monthly payment, you’d pay off the loan in 3 years and pay a total of $10,850, saving you $1,878 and 7 years of your time.

Lower Your Debt-to-Income Ratio

Your debt-to-income (DTI) ratio is used to compare how much you earn (your gross income) against how much you owe (your total debt). [DTI = Monthly Debt ÷ Gross Monthly Income]

For example, let’s say your total debt payment per month is $3,500, including expenses like your mortgage, student loan payments, and credit card bills. Your gross monthly income, or how much you earn every month before any deductions, is $6,000.

Using the formula above, we would calculate $3,500/6,000, which is roughly 58%.

A “healthy” DTI is 36% or less. Having a DTI over 50% indicates that you owe more than half of what you make, which is a very poor ratio that lenders do not look kindly upon. 

If you pay your student loans off early, you can lower your DTI quickly. Having a lower DTI will help you secure lines of credit more easily, such as a mortgage, a new credit card, and more.

You Can Focus on Other Financial Goals

If you knock out your student loans early, you can focus on other financial goals like buying a house or saving for retirement. 

Downsides of Paying off Student Loans Early

Monthly Payment Will Be Higher

To pay off your student loans early, your monthly payment must be higher. For example, let’s say that you are paying $250 per month to pay off your student loan in two years. If you want to pay your loans off in just one year, your monthly payment must double to $500 because your repayment plan is halving.

If affording a higher monthly payment would be nearly impossible, or put you in a risky financial situation, it may be best to hold off.

You Won’t Be Eligible for Student Loan Forgiveness

The federal government offers several student loan forgiveness programs, such as Public Service Loan Forgiveness (PSLF) or the Income-Driven Repayment Forgiveness (IDRF).

If you are eligible for a federal student loan forgiveness program that requires you to make payments for a certain amount of time, you should not pay off your student loans early. Doing so could make you ineligible for forgiveness.

If you are not eligible for student loan forgiveness, paying your balance off early would be wise.

This only applies to borrowers with federal student loans, as private student loan borrowers do not have the option for loan forgiveness.

You May Not Be Able to Focus on Other Financial Goals for the Time Being

By directing more money towards paying off your student loans, you may not have enough money to focus on any other financial goals, like saving for a down payment on a home or contributing to a Roth IRA. So, consider your financial priorities before directing all extra funds toward student loan payoff.

Is It Worth It To Pay Off Student Loans Early?

Yes, it is worth it to pay off your student loans early if you are financially stable enough to do so. If you can afford to put more money onto your loan, it will save you both time and money in the long run.

However, there are instances when it is not worth it to pay your loans off early. For instance, if you qualify for federal student loan forgiveness, have debt with a higher interest rate, or do not have an emergency fund, it might be more advantageous to prioritize other aspects of your finances.

The total student loan debt, between both federal and private loans, is $1.75 trillion. If your debt is contributing to this total, it’s time to pay it off.

Whether you borrowed private loans, federal loans, or a mix of both, deciding which student loans to pay off first can be difficult. However, it’s important to keep in mind that there is no single one-size-fits-all solution.

Instead, let’s explore a few tactics that can help you save money. This will help you determine which student loans to pay off first, based on your unique financial circumstances

Option #1: Pay Off Private Student Loans First

Private student loans are offered by commercial lenders like banks and credit unions. These organizations are autonomous, meaning they have the discretion to set interest rates, repayment plans, and borrower protections for loans. 

Generally, in comparison to federal loans, private loans have less advantageous terms, with no option for loan forgiveness, higher interest rates, and fewer repayment plans. 

If the lack of flexibility or the higher interest rates for your private loans is a cause of concern, pay those loans off first. By doing so, you are essentially targeting the “weightier” portion of your debt.

Additionally, consider refinancing your private student loans if it’s an option. Refinancing is the process of borrowing a new loan to pay off your current debt with better terms. This can lower your interest rate and monthly payments, which will be beneficial in the long-run. Keep in mind that you will need a relatively strong credit score to qualify for loan refinancing. 

Option #2: Pay Off High-Interest Student Loans First

When Einstein said, “He who understands [compound interest], earns it. He who doesn’t, pays it,” he wasn’t kidding. The debt avalanche method is most effective for minimizing the costs of compound interest, which will save you the most money in comparison to other debt payoff benefits.

With this method, you’ll make minimum monthly payments on all loans while making surplus payments on the loan with the highest interest rate. Then, once you’ve paid off the highest interest rate loan, you’ll carry that payment amount to the next highest interest rate loan.

For example, let’s say you have two student loans:

• Loan A: $10,000 balance, 5% interest rate, 10-year repayment term
• Loan B: $5,000 balance, 3% interest rate, 2-year repayment term

In this scenario, you would make surplus payments on Loan A while still making minimum payments on Loan B. Doing so would minimize the interest costs for Loan, given that it will accrue a greater amount in interest than Loan B. 

Option #3: Get Rid of Small Loans First

Targeting smaller loans is another debt payoff strategy known as the snowball method. The logic behind this method is to get rid of the loan with the lowest balance first.

The snowball method is relatively simple. First, organize your loans based on the total amount, without regard to the interest rate. Then, make paying off the smallest loan your priority. After the smallest loan is paid off, target the next loan in line. 

For example, let’s say that your debt consists of the following:

• Loan A: $5,000 balance, 3% interest rate
• Loan B: $2,500 balance, 6% interest rate
• Loan C: $3,500 balance, 8% interest rate

In this scenario, you would pay off Loan B first, given that it has the smallest balance. 

While the snowball method isn’t the best repayment option in terms of saving the most money possible, you’ll be able to knock out individual loans quicker and have more upfront victories. For some, these upfront victories are what motivates them to stay consistent with their debt payoff journey.

Which Debt Payoff Strategy Will Save You the Most Money?

The debt avalanche method, where you target your high-interest loans first, will save you the most money. This is because you’re targeting debt with the highest interest rate, which will grow the fastest. 

However, even if the debt avalanche method will save you the most money, it may not be the most optimal way to repay your debt. According to a study done by Northwestern’s Kellogg School of Management, borrowers who use the snowball method are more likely to pay off all of their debt than borrowers who use other methods.

Closing Thoughts From the Nest

As you consider debt payoff strategies, remember that there is no “right” answer. Instead, think about what best fits your financial situation. 

If it’s less financially straining to pay off smaller loans first, use the snowball method. If you want the most bang for your buck and are confident you will be able to stick to a plan, use the avalanche method. In the end, everything depends on what you feel is best for you.

Making that last debt payment can feel liberating. The balance finally hits zero, and a weight is lifted off your shoulders. While an incredible accomplishment, you may notice a drop in your credit score, leaving you to feel quite defeated. It’s normal to wonder, “Why has my credit score dropped after paying my student loan? Isn’t that a responsible thing to do?” It does sound a bit backwards, huh?

However, it makes more sense when you understand how your credit score is calculated. Here’s why your credit score might drop after paying off debt.

How Your Credit Score is Determined

Your FICO credit score is calculated using five different factors: payment history, amounts owed, length of credit history, credit mix, and new credit. Each factor is weighed differently when calculating your score.

Payment History (35%)

To evaluate how risky lending to you might be, lenders will look at how you’ve handled credit in the past. If you have a spotless record, you’ll likely do well in this category. If your credit history is checkered with late or missed payments, however, you may lose some points here.

Amounts Owed (30%)

Having outstanding balances doesn’t necessarily make you a risky borrower to lend to. However, using a high percentage of your total credit limit is an indicator that you may be overextending yourself financially.

For example, if you have a total of $20,000 of available credit, and you’re using $19,000 of that, you may appear to be struggling financially. On the other hand, if your total available credit was $50,000, owing $19,000 wouldn’t be so bad.

In a lender’s eyes, having a high outstanding balance in comparison to your total credit limit puts you at a higher risk of defaulting on any one of your loans. Thus, a high credit utilization ratio will impact your credit score.

(Note: “Amounts Owed” is often referred to as credit utilization.)

Length of Credit History (15%)

Generally speaking, the longer your credit accounts have been open, the better your score may look in this category. Simply put, a long history of effectively managing your credit shows lenders you’re capable of handling credit responsibly.

Credit Mix (10%)

FICO scores also take into account your credit mix, or the variety of credit accounts you have (ie. credit cards, student loans, mortgage loans, retail accounts, etc.). While you don’t need to have an account open in each category, having a mix of credit accounts shows lenders you’re able to manage multiple lines of credit responsibly.

If you do have a mix of credit accounts and manage them effectively, it can give your score a boost.

New Credit (10%)

Opening several new lines of credit in a short period of time can be an indicator that you’re struggling financially. Thus, opening too many new lines of credit can hurt your score.

Why Your Score Drops After Paying Off Debt

While paying off debt is certainly something to be proud of, it may not reflect positively when it comes to your credit score. Here’s why:

It Can Change Your Credit Utilization Ratio

Let’s say you have three credit cards, each with a $10,000 limit. They’re set up as follows:

Card A: $5,000 balance
Card B: $6,000 balance
Card C: $1,000 balance

As a result, you’d have a credit utilization ratio of 40% (12,000 total outstanding balance / 30,000 total credit limit).

Now, let’s say you decide to pay off and close Card C. Your new credit utilization ratio would be 55% (11,000 total outstanding balance / 20,000 total credit limit).

By closing Card C, the credit limit associated with it is no longer factored into your credit utilization ratio. Thus, the new ratio of your outstanding balance to your total credit limit actually ends up being higher than it was before.

In some cases, closing an account can lead to a higher credit utilization ratio, as it changes the amounts owed in comparison to the total credit limit. This, in turn, will negatively impact your score.

It Shortens the Length of Credit History

When you close a line of credit, the credit history associated with it goes out the window. In the case of revolving credit, such as a credit card, this happens when you close a card. With student loans, this happens when you pay off the balance.

A few months after you make that final payment on your student loans, it will no longer be an active line of credit. The credit history associated with it, whether positive or negative, will be removed. Depending on how long you’ve had the account open in comparison to your other lines of credit, it could shorten your credit history.

For example, let’s say these are the three lines of credit you currently have:

Student Loan A: Borrowed 15 years ago
Student Loan B: Borrowed 11 years ago
Credit Card: Opened 10 years ago

In this scenario, the average age of your accounts is 12 years (15 + 11 + 10 / 3). If you paid off Student Loan A, the average age of your accounts would decrease to 10.5 years (11 + 10 / 2). 

The credit history you had from Student Loan A gets wiped from your record, and your credit history is calculated based on the other lines of credit you have active.

It Could Change Your Credit Mix

If you have both revolving credit (like credit cards) and an installment loan (like a student loan), paying off your student loans will shift your credit mix. This could negatively impact your FICO score.

Student Loan Options for Bad Credit

If your credit score has dropped, you may need to look into how and where to get private student loans for bad credit. Rather than searching for lenders one-by-one, we recommend starting the process with an automated student loan search tool. After you complete the free Sparrow application, we’ll show you the rates and terms you’d qualify for with 17+ premier lenders.

Here is a list of the best student loan options for bad credit:

Will Biden’s Student Loan Forgiveness Impact Your Credit Score?

While President Biden’s student debt forgiveness will provide relief to millions of borrowers, it may wind up hurting your credit score temporarily for the reasons discussed above. And while the impact to your score pales in comparison to the relief provided, it’s important to understand why and how your score may drop so you know what to expect.

How Long It’ll Take for Your Score to Recover

If your credit score drops after paying off debt, don’t fret. While quite the bummer, it typically takes around 1-2 months for your score to bounce back (if everything else remains the same). 

In the meantime, consider other ways to increase your credit score. Continue to use other lines of credit responsibly, and check on your score periodically to see if it increases as expected.

Final Thoughts from the Nest

While frustrating to see your credit score drop after paying off your student loans, it’s normal. Continue to practice healthy financial habits, and your score should bounce back in no time.

If, after a few months, your score is still the same, consider examining your full credit report to check for errors that may be preventing your score from recovering.

When paying for college, a few thousand here and there might not seem like much. But overtime, it adds up quickly. And, with more expensive programs and advanced degrees, it’s hard to dodge the colossal tuition bills.

If you’re staring at a student loan balance of over $200,000, you might be feeling overwhelmed, and rightfully so. It may be challenging to conceptualize how one could possibly attack such a mountain of student loan debt.

The good news is this: It’s entirely possible, and we’re here to help you break it down. Here’s how to pay off $200,000 in student loans.

Jump Ahead > Loan Forgiveness • Refinance • Pick a Strong Debt Payoff Plan • Cut Expenses • Negotiate a Raise or Pick Up a Side Hustle • Jobs with Debt Payoff Benefits

Look for Loan Forgiveness Options

Student loan forgiveness programs can wipe out all, or some, of your student loan debt. That, combined with the very specific criteria of some programs, makes it a necessary starting point.

Oftentimes, student loan borrowers are unaware of such programs and their requirements, only learning about them when they are further along in their debt payoff journey. For example, the Public Service Loan Forgiveness program requires recipients to have made 120 qualifying monthly payments on an income-driven repayment plan. It is not uncommon for borrowers to have made payments for years without recognizing that they don’t count toward forgiveness as they weren’t on the proper repayment plan.

Thus, it’s important to consider these programs as soon as possible in your debt payoff journey. Making yourself aware of the options available can help you begin the process of meeting the necessary criteria before making non-qualifying payments.

Consider Refinancing Your Student Loans

If you have high-interest loans, refinancing should be your next step. Refinancing, in a simple sense, is the process of swapping your current loan(s) for one with a better interest rate or terms. 

If affording your monthly payments is your main concern, refinancing to a longer repayment term will be helpful. By doing so, your monthly payments will decrease. Be aware, however, that a longer repayment period typically leads to paying more in interest over the life of the loan.

If you’d simply like to get out of debt faster and pay less over the life of the loan, refinancing to a lower interest rate and/or a shorter repayment period will be a great route. Knocking down your interest rate, even just a few percentage points, can save you thousands over the life of the loan. 

You can refinance all types of student loans, including both federal and private student loans, regardless of whether they were for medical school, law school, or a simple undergraduate degree. However, you’ll need a strong credit score and stable income to qualify.

If your financial situation isn’t up to par in those areas, consider adding a creditworthy cosigner to the loan. If adding a cosigner isn’t an option, consider working with a lender that has low credit score requirements.

Make Sure You’re Debt Payoff Plan is Strong

While throwing any and all cash on your student debt is a great start, having a more well-thought-out debt payoff strategy will likely generate better results. Here are a few ways to strengthen your approach:

Use the Avalanche Method

While there are a variety of debt payoff strategies, the Avalanche Method will save you the most money over the life of the loan. With this method, you will make minimum monthly payments on all loans. Then, make monthly surplus payments on the loan with the highest interest rate until it is paid off.

Once that loan is gone, take the amount you previously allocated toward it, and start directing it toward the next highest interest rate loan until that loan is gone, too. Continue this process until all loans are paid off.

Make Biweekly Payments

Student loan interest typically compounds daily. So, by the time you’ve made it to your monthly payment, interest has accrued for nearly 30 days.

To get ahead of the interest, and make more of your payment go toward the principal, take the amount you’d contribute each month and divide it into two payments. Then, make that half payment every other week, instead of once per month. While a small change, it can reduce how much you pay over time quite significantly, especially when done with high-balance loans.

Make Surplus Payments

If you happen to get a raise, a bonus at work, or a hefty tax refund, consider throwing it at your student debt. While tempting to spend that cash on more exciting purchases, putting it toward your debt may be more rewarding in the long run.

Cut Back Expenses Where You Can

Digging yourself out of $200,000 in student loan debt will take some discipline. If you don’t already utilize a budget to guide your spending, now is the time to make one.

A budget will allow you to track your income and expenses, giving you a better idea of where you can cut back. For example, if you happen to spend $200 per month on coffee, consider cutting that in half and directing the remainder to your debt.

Negotiate a Raise or Pick Up a Side Hustle

If cutting back on expenses isn’t possible, consider increasing your income through negotiating a raise or picking up a side hustle. While it may only lead to a few thousand dollars per year, it can make a serious dent in your debt.

For example, let’s say that your increased income leads to an additional $500 per month. On a $200,000 loan balance with a 4.5% interest rate and a 10-year repayment term, that $500 monthly surplus payment would save you over 2 years of repayment and $11,300 over the life of the loan.

Find a Job with Debt Payoff Benefits

Just as some employers provide healthcare benefits or a 401k match, some provide debt payoff benefits as well. While it may seem too good to be true — I mean, an employer paying off your debt is pretty sweet — it might be more common than you think. In fact, around 17% of employers offer student debt assistance, and another 31% plan to offer it in the future.

If you’re in the market for a new role, consider searching for one with debt payoff benefits. Companies like Aetna, Chegg, Fidelity Investments, Google, Hulu, and Lockheed Martin all offer competitive debt payoff benefits, some providing up to $6,000 per year.

FAQ About Paying Off a Lot of Student Debt

How long will it take me to pay off my student loans?

It depends on the amount of debt you have, your interest rate, your repayment period, and your debt payoff strategy. To find the exact timeline for your specific situation, use a debt payoff calculator.

How much student debt is too much?

There is no numerical threshold that is widely recognized as “too much” student debt.

For example, the average dental student graduates with nearly $300,000 in student loan debt. However, with dentist salaries often in the $150,000-$200,000 range, it may not be an unreasonable amount of debt for that industry.

That amount of debt, however, for an entry-level civil engineer with a starting salary of roughly $60,000 may be overwhelming. What is considered “too much” debt is entirely subjective.

Is it better to have savings or pay off student loans?

Before dipping into savings to pay off student loans, be sure to have a solid emergency fund worth 3 to 6 months of expenses.

Late last year, the Department of Education released findings that highlighted the growing trend in which loans are prolonging. In fact, the average time it takes for a student to repay their student loans is now 20 years. 

As a student, you should be aware of the current circumstances and understand what the averages are to avoid any long-term difficulties. Although this finding did showcase the ever-increasing trend, there are some key points to note before making a quick judgment call.

Firstly, loan repayment can differ widely, and I mean immensely. Many conditions must be taken into account like the principal amount borrowed, interest rates, what type of degree you plan on pursuing and most importantly, what type of loan you end up choosing (federal or private). 

How Long It Takes to Pay Off Student Loans

By Degree Type

As mentioned, the different degree types will affect your loan repayment timeline, but with a concrete plan and the knowledge, you will be able to pay your debts in a timely manner.

Associate’s Degree

On average, associate’s degrees take the shortest amount of time to repay, ranging from just over 4 years to just over 7 years depending on the loan type. Federal loans take the shortest amount of time to repay, and private student loans take the longest. 

Moreover, associate’s degree graduates have an average annual salary of $46,100, and more than 90% of students pursuing this type of degree take out student loans.

Bachelor’s Degree

Next, looking at a bachelor’s degree, it takes, on average, 5 years and 7 months to repay student loans if attending a public institution. If the student is attending a private non-profit institution, it would take just under 7 years, and with a private for-profit institution, it would take just over 9 years.

Additionally, compared to the $46,100 average annual salary for associate’s degree holders, a bachelor’s degree holder will take home nearly $65,000. 

Graduate Degree

Students and professionals pursuing graduate-level degrees, on average, borrow more than undergraduate students. On average, a master’s degree will take 9 years to repay if you were to attend a public institution versus 13 years from a private non-profit and 18 years from a private for-profit college. This vast discrepancy between the timelines in loan repayment showcases the importance of choosing where and how your loan is formed.

Despite the higher debt, master degree holders earn typically about $78,000 annually, and it only goes up from there.

Post-Graduate Degree

For the post-graduate student, this type of education and degree is mostly about furthering themselves in a very niche, specific concentration, and with that comes a significantly increased repayment time on average. 

For example, a student pursuing their doctoral degree will take roughly 13 and a half years to repay their student debt from both a public and private non-profit college, whereas a private for-profit institution loan on average takes over 38 years to complete.

Finally, let’s take a look at more specialized degrees, those being medical and law school repayment timelines.

Law Degree

A recent study showed that the average law school debt is over 4 times the average bachelor’s degree holder’s debt. Totaling $160,000 and with an average starting salary of $55,200, law degrees are tremendously expensive due to the intensive nature of the education as well as how niche they are.

Repayment for law degrees drastically vary based on the domain a lawyer chooses to pursue — public or private. On average, a lawyer working in the public sector will take 26 years to repay their loans if they use 20% of their income. For lawyers in the private sector, it will take just over 16 years if they were to use 20% of their income.

One caveat for this is that the U.S. Consumer Finance Protection Bureau (CFPB) reports that the ideal amount to spend on student loan repayment is 10% of your income. If a lawyer working in the public field were to follow this, it would not be possible for them to repay their loans, and for a lawyer in the private field, it would take 50 years!

Medical Degree

For students pursuing a medical degree, the average student loan debt is even higher than law school at over $240,000. Depending on your lifestyle choices and frugality, you may be able to pay off a medical degree in 5 years or less if you were to live well below your means. Another popular option is to apply for Public Service Loan Forgiveness. This program, run by the US Department of Education allows participants to reduce the total cost of their education, but forces them to make payments for 10 years before the remaining debt is forgiven. 

By Loan Type

As mentioned above, repayment of student loans varies drastically depending on certain factors, one of them being the type of loan it is. This could be either a federal loan or a private student loan.

Federal Student Loans

Breaking this down further, federal loans can include standard repayment plans, graduated repayment plans and extended repayment plans. 

Standard repayment plans are typically fixed monthly payments for a set number of years. Graduated plans are structured in a fashion where payments are on the lower end of the scale, and increase over time. For fast-progression degrees like graduate degrees, this is most common. Extended repayment plans are essentially fixed or graduated payments with the only caveat being that it is a 25-year term.

Aside from these loan structures, there are also five different types of income-driven repayment plans. The monthly payment amount for these plans are based upon your income. Payments are generated based upon a percentage decided and with that, payments are made. 

Private Student Loans

Despite the vast amount of federal loans available, private loans still serve a demographic, and understanding private loan structures is critical as it can shave off years of repayment and debt.

Private student loans originate from either non-profit institutions, generally academic, or for-profit institutions like banks or other financial institutions. As private loans are, well private, they can vary immensely from loan to loan and depending on your personal circumstances.

For example, as of August 2022, Sparrow’s lending partners offered interest rates as low as 1.13%, although rates that low are typically reserved for those with the best credit score rating. The estimated average is roughly 6%-7%.

How Long It Will Take You to Pay Off Your Student Loans

Repayment timelines are highly dependent on your exact loan terms and conditions. While understanding the average debt payoff timeline is helpful, your individual timeline may differ based on your repayment period and monthly payments. One quick tip is to use a student loan calculator that can calculate your payoff date based on your loan balance, interest rate, and repayment term.

What’s Next

As with anything this impactful, student loans must take time and thoughtful consideration before diving into the deep-end and making a mistake. Using Sparrow as a loan comparison tool that aggregates loans from different lenders will let you know the intricacies of the loan, and with that, you can figure out more details regarding repayment structures. 

Regardless, loan repayment varies for everyone. For someone pursuing their doctoral degree, it may not be of tremendous concern to repay the loan immediately or take on higher payments. But, as everyone is in different circumstances, the conditions of your repayment will be unique. Ultimately, know that after analyzing the data, you can make an informed decision about choosing your student loan! 

*Data sourced from EducationData.

The average student loan debt for college graduates is around $37,000, though the average student loan debt for engineers varies based on the type of engineering that you study. 

If you plan to pursue a degree in engineering, it’s important to look ahead into the post-graduation future. To do so, consider factors like the average student loan debt for engineers, the starting salary for your specific engineering job, and how you plan to repay your debt.

What is the Average Student Loan Debt for Engineers?

The following table showcases the average student loan debt for engineers based on the specific engineering field that they studied, compiled by the Education Data Initiative.

Type of Engineering	Type of Degree	Average Student Loan Debt
Mechanics, Robotics, and Automation Engineering	Associate’s Degree	$6,500
Civil Engineering Technologies	Associate’s Degree	$15,250
Engineering Science	Associate’s Degree	$10,500
General Engineering	Bachelor’s Degree	$24,999
Biochemical Engineering	Bachelor’s Degree	$24,709
Civil Engineering	Bachelor’s Degree	$24,035
Aerospace, Aeronautical, and Astronautical Engineering	Bachelor’s Degree	$23,875
Chemical Engineering	Bachelor’s Degree	$23,106
Mechanical Engineering	Bachelor’s Degree	$23,000
Computer Engineering	Master’s Degree	$38,967
General Engineering	Master’s Degree	$30,663
Civil Engineering	Master’s Degree	$27,931
Mechanical Engineering	Master’s Degree	$23,302

How Long Does it Take Engineers to Pay Off Student Loans?

While the amount of time it takes engineers to pay off their student loans differs from engineer to engineer, here’s what you should know:

If you only make minimum monthly payments on your loan, it will take the entire repayment term to pay off the loan. However, if you make surplus payments, or pay more than the amount of your minimum payments, you can pay off your loan a lot faster. 

>> MORE: Compare student loan rates across multiple lenders

For example, let’s say that a chemical engineering student took out a student loan of $25,000 with an interest rate of 4% and a 20-year repayment term. Then, if they only made the minimum monthly payment, it would take the student the entire 20-year repayment term to pay it off in full. By making monthly surplus payments of $300, however, the student would pay off their loan completely in around 6 years. 

Likewise, let’s say that the student took out a loan of $28,000 with an interest rate of 6% and a repayment term of 15 years. Then, if they only made the minimum monthly payment, it would take the student the entire 15-year repayment term to pay it off in full. However, by making monthly surplus payments of $500, the loan would be paid off in 4 years. 

Accordingly, the amount of time that it takes for engineers to pay off their student loans varies based on the interest rate of their loan, their monthly surplus payment amount, and the loan total.

>> MORE: Top 30 companies that will pay off your student loan debt

Average Engineer Salary

How long it takes you to repay your student loan debt as an engineer is often dependent on your salary. Generally, the higher the salary is, the easier it will be to pay off student loan debt. 

For mechanical engineers, the average student loan debt is $23,000 while the average starting salary is $64,682. For civil engineers, however, the average student loan debt is $24,035 while the average starting salary is $59,892. 

Use the following table in combination with the table above to compare your expected student loan debt and future salary. 

Type of Engineering	Mean-Entry Level Salary	Mean Annual Salary	Top 10% of Salaries
Aerospace Engineering	$86,034	$122,270	$168,370
Biomedical Engineering	$63,575	$101,020	$154,750
Chemical Engineering	$68,797	$121,840	$187,430
Civil Engineering	$59,892	$95,490	$133,320
Computer Engineering (Hardware Engineers)	$75,953	$136,230	$208,000
Construction Management	$59,259	$108,210	$163,800
Electrical Engineering	$68,819	$107,890	$162,930
Environmental Engineering	$58,808	$100,220	$153,200
Geological and Mining Engineering	$69,879	$100,450	$162,720
Geospatial Science and Technology	$58,562	$73,510	$103,450
Industrial Engineering	$70,496	$95,200	$129,620
Mechanical Engineering	$64,682	$97,000	$136,210
Mechatronics/Robotics Engineering	$80,735	$86,000	$127,000
Surveying Engineering	$78,810	$68,880	$101,240

How to Refinance Your Engineer Student Loan Debt

If you are an engineer who has already taken out multiple student loans to cover the cost of education, consider refinancing your student loan debt. 

Refinancing is when you take out a new loan to pay off all, or one of, your current loans. You then receive a new loan with a new interest rate, loan term, and repayment plan.

The best student loan refinance lender will ultimately be the one that works best for you. Rather than searching for lenders one-by-one, we recommend starting the process with an automated student loan search tool. Specifically, with the free Sparrow application, you can see the rates and terms you’d qualify for with 17+ premier lenders.

>> MORE: Compare student loan refinance rates:

Benefits of Student Loan Refinancing

Refinancing your student loan debt allows you to save more money in the long run; a lower interest rate and shorter repayment term can help you save thousands of dollars. 

For example, let’s say that you have a student loan for $15,250 with a 7% interest rate and a 10-year repayment term. The minimum monthly payment for the loan is $177, but you’ve been making surplus payments of $300 per month. Accordingly, by paying $300 per month, you would pay off the entire loan in 3 years ($17,091 in total including interest).

>> MORE: Should I refinance my student loan?

However, let’s say you apply to refinance instead. Then, let’s say your new loan offers you a 4% interest rate, starting at the same balance and with the same repayment term of 10 years. Now, with the same $300 monthly surplus payments, you can pay off the entire loan in 3 years, but it would only cost you $16,293 total.

In this example, by refinancing your loan, you save $793 and a few months of making payments.

If you want to refinance your student loans, you’ll want to have a strong credit score and history, as well as a steady income. Note that you can refinance multiple private student loans, and you may have the option to combine, or consolidate them into one depending on the lender. 

>> MORE: What credit score do I need to refinance my student loan?

Closing Thoughts From the Nest

If you are an engineer who is shopping around for a private student loan or looking to refinance your student loans, submit a free application with Sparrow. We help you compare loans that you qualify for across 17+ lending partners so you can find the best loan on the market for you. 

According to Forbes, the average student debt per person is $28,950. That’s a lot of debt. Student loan debt like that can make it hard to make ends meet. Fortunately, there are so many ways to pay off your student loans. Some of them may even surprise you.

To help get you started, we’ve made a list of 17 creative ways to pay off your student loans. 

>> MORE: What is the average student loan debt?

Become a Freelancer 

Being a freelancer gives you the freedom to work around your schedule. Plus, you can work as just about anything online. You could be a virtual assistant, do graphic design, or write articles. Pangea is a great freelance website specifically designed for college students and graduates. They offer a minimum pay of $15/hour and guidance in starting a freelance career. 

Teach Abroad 

Teaching abroad can save you money depending on where you teach. A lot of countries have lower costs of living than the United States. So, you can save money on both rent and general living expenses. Be sure to research where you want to teach before you go. You will need to be certified to teach abroad. 

Work as a Grocer Delivery Driver

You can get paid to deliver groceries with apps like Shipt or Instacart. Customers will put their orders in through the app, and you’ll go to pick up the items and deliver them to their house. You can get paid between $16 and $22 an hour, plus tips. 

Donate Plasma

New plasma donors can earn up to $400/month. Your plasma can then be used to develop cures for certain diseases. So, not only will you be making money but helping to make advancements in medicine. Isn’t that great? Visit donatingplasma.org for more information on getting started. 

Use Your Tax Refund 

For many adults, a tax refund can be incredibly exciting, as you now have some extra income on your hands. While you only get a tax refund once a year, this extra money can be used to help pay down a lot of your student loans. Talk to an accountant or do research to learn more about tax refunds. 

Drive for Uber or Lyft 

With Uber and Lyft, you can get paid for driving. The best part? It doesn’t have to be a big time commitment. You get to set your own hours and choose the number of rides you pick up. You’ll also have the opportunity to earn tips. 

Have a Yard Sale or Sell Items Online 

You know what they say. One man’s trash is another man’s treasure. Nowhere is this more evident than in yard sales. You can sell old clothes, textbooks, or anything else at a physical yard sale or on websites like eBay. 

Walk Dogs 

What if we told you that you can get paid for hanging around dogs? Well with websites like Rover and Wag, you can. You can set your schedule and walk dogs whenever you’re available. While there may be service fees on the websites, you’ll also have a chance to earn tips from clients. 

Babysit

If dogs aren’t your style, then what about kids? There are a lot of parents who need help watching their kids. Reach out to family and friends to see when you can babysit. You can also use websites like Care.com to expand your services to other people. 

Negotiate a Raise

If you’re in good standing with your company, you can negotiate with your boss for a raise. This income boost can help you earn more money to put toward your debt. Be sure to build a case as to why you deserve a raise first, and then schedule the meeting with your boss. 

Tutor

Just like you needed help with some classes, so do other students. Reach out to college students you know or to your old school and make it known that you’re available to tutor others. You can also use online websites like Tutor.com to help students virtually from wherever you are. 

Find an Employer With Debt Payoff Benefits 

Some employers are willing to give you extra money to put toward lowering your student debt. So, you’ll be able to get work experience all while paying off your student loans. You can use Dwindle Student Debt, a job site that specializes in listing jobs with debt payoff benefits, to find these opportunities. 

>> MORE: The most effective debt payoff strategy you need to know

Utilize Creative Debt Payoff Strategies 

Making some extra income can be a great idea to pay off debt. However, there are several other strategies you can implement to pay off your student debt faster. 

Refinance Your Student Loans

Another great option is to refinance your student loans. Student loan refinancing can get you better loan terms like a lower interest rate. You’ll need at least good credit and a strong income to qualify. Refinancing is available for both federal and private student loans. However, you’ll lose federal benefits like income-driven repayment plans or loan forgiveness if you refinance federal loans. So, just take the time to consider whether refinancing is the right move for you. 

>> MORE: Best student loan refinance rates

Autopay Discount

An autopay discount is when you get an interest rate discount for signing up for automatic student loan payments. You can get a rate reduction of up to .50%. As great as this sounds, not every lender offers it, so be sure to ask if this is available for you.  

Student Loan Forgiveness Programs

Student loan forgiveness programs will partially or completely forgive your remaining student loans. They can be a great way to get rid of your federal student loan debt. The federal government offers different programs you can apply to. They all have their own requirements, so talk to your loan servicer to see which is best for you. These programs are not available for private loans. 

>> MORE: What is student loan forgiveness

Biweekly Payments

Biweekly student loan payments can help you pay off your debt faster. Divide your regular payment into two, and then make that half payment every other week. Doing this will get you a little bit ahead on interest and can even result in 1 more full payment per year. On the other hand, biweekly payments can be a little challenging to make. Only do it if you have the additional income to do so. 

Final Thoughts from the Nest 

This list is a great starting point, but you’re by no means limited to just these options. There are a lot of different ways to pay off your student loans faster. You just have to look for them. 

If you decide that refinancing is one of the solutions you want to try, use Sparrow to help you. Sparrow partners with 17+ lenders that offer great refinancing options. All you have to do is fill out the Sparrow application. This application will then match you to what you best qualify for from our lenders. Complete the Sparrow application and get started on paying off your loans quicker.

Back in 2013, the federal government removed the borrowing limits for Parent PLUS Loans. This meant parents could take out the full amount of their child’s college education in Parent PLUS Loans, which ultimately led to increased Parent PLUS loan debt. In fact, the average Parent PLUS Loan debt is around $29,600 according to a recent study. Parent PLUS Loan forgiveness can help you get rid of this debt.

Here’s what you need to know about Parent PLUS Loan forgiveness.

Do Parent PLUS Loans Qualify for Forgiveness? 

The answer is yes! There are several programs that offer Parent PLUS Loan forgiveness. 

Income-Contingent Repayment

The Income-Contingent Repayment (ICR) plan is a form of income-driven repayment for federal student loans. It’s typically a more affordable repayment option because your monthly payment is 20% of your discretionary income. Plus, you can get loan forgiveness after 25 years of payments.

Technically, Parent PLUS loans are ineligible for the Income-Contingent Repayment (ICR) plan. But if you were to consolidate your Parent PLUS Loans via a Direct Consolidation Loan, you would then qualify. Talk to your federal loan servicer about consolidation options and ICR plans. 

Public Service Loan Forgiveness for Parent PLUS Loans

The Public Service Loan Forgiveness (PSLF) Program will forgive the student debt of public service workers. You’re eligible as long as you work for a qualified employer and have made 120 on-time payments under an income-driven repayment plan. Your payments must have started after October 1, 2007.

Like the ICR plan, PSLF is only available for Direct Loans. But, you can always consolidate to be eligible. You can access the application for forgiveness through the PSLF Help tool. In addition to that, you’ll also have to submit an employer certification form when you apply. 

Military Forgiveness Programs

You might be able to get Parent PLUS Loan forgiveness if you’ve served or are currently serving in the military. But there are some programs that limit forgiveness to borrowers who took out loans on behalf of a student service member.

The exact loan amounts and requirements needed will depend on the program. So, talk to your loan servicer about military forgiveness options available to you.

Federal Agencies

Some federal agencies will offer Parent PLUS Loan forgiveness as an incentive to work for them. So, the employee of the agency has to be the borrower of the loans. For example, if you worked for the federal agency that has this option, you could use this benefit. But, if your child, the student, worked for the agency, you wouldn’t be able to do this. 

Other Options to Get Rid of a Parent PLUS Loan Faster 

If you can’t qualify for forgiveness, you still have other options to help pay off your PLUS Loans faster.  

Employer Student Loan Repayment Assistance

Certain employers may offer student loan repayment assistance programs (LRAP). If so, your employer will make monthly payments to your lender to help you to pay off your student loans quicker. Employers will have different policies on their LRAP when it comes to how much money they can pay or what loans are eligible. Talk to your employer about whether they offer a LRAP and their policies regarding it. 

Consider Refinancing

Student loan refinancing is the process of letting a private lender pay off your loans, whether they’re private or federal student loans. In doing so, they’ll give you a new private loan to pay them back, but with better loan terms. To be able to get those better terms, though, you’ll need at least a strong credit score and stable income.

Additionally, refinancing a federal loan will disqualify you from federal benefits. This means missing out on income-driven repayment plans or forgiveness programs. You’ll need to be sure of your decision before moving forward with this if you have federal loans. 

If you do decide to refinance your Parent PLUS Loans, you can get started by filling out the Sparrow application. The Sparrow application will match you with what refinance loans you qualify for from 15+ lenders. 

Loan Discharge Programs

You may also be eligible for a discharge of your Parent PLUS Loans. Loan discharges free you from any obligation to finish paying back the loan. With federal discharge programs, you might even get reimbursement for payments. As a bonus, the discharge will be reported to credit bureaus, and any adverse credit history associated with your loans will be erased. 

Parent PLUS Loans can be discharged for several reasons, such as: 

1. Death of a parent or a student on whose behalf the loans were borrowed 
2. The parent becomes permanently and totally disabled 
3. Bankruptcy discharge 
4. Closed school discharge 
5. False certification discharge 
6. Identity theft discharge 
7. Unpaid refund discharge 
8. Defense to repayment discharge 

The amount discharged and the requirements to get a loan discharged is dependent on the program. Talk to your loan servicer for more information on loan discharge programs and which ones you qualify for. 

Final Thoughts from the Nest 

Although a lot of the information online may focus on the students, there are plenty of resources to help parents with Parent PLUS Loan forgiveness. If you don’t qualify for any of the Parent PLUS Loan forgiveness programs, consider refinancing with Sparrow. To get started, fill out the Sparrow application. 

Sparrow’s goal is to give you the tools and confidence you need to improve your finances. Many or all of the products featured here are from our partners who compensate us. This may influence which products we write about and where and how the product appears on a page. However, this does not influence our evaluations. Our opinions are our own. While we make an effort to include the best deals available to the general public, we make no warranty that such information represents all available products.

If managing your student debt is becoming a challenge, you aren’t alone. As a veteran or active duty service member, there are various options to help you manage your student loan debt such as military student loan forgiveness programs. 

Here are some of the best military student loan forgiveness programs you should know about.

Military Student Loan Forgiveness Programs 

Student loan forgiveness programs are federal government programs that cancel your student loans. The exact amount each program will cancel and the requirements for such depend on the program itself. Some of these programs are directly tailored for military service members. 

National Defense Student Loan Discharge

The National Defense Student Loan Discharge is for students who have served in the military. To qualify, you must have served for 12 consecutive months in a duty station that qualifies you for imminent danger or hostile fire pay. You also must have Federal Perkins Loans or Direct Loans to be eligible.

The amount of debt that will be discharged will vary. Contact your loan company for more information on how much debt you can get discharged. 

To apply, you’ll need to fill out a Department of Defense form and send it to your loan servicer. You must also submit a letter explaining why you think you qualify. Contact your lender for information on how to get started. 

Veterans Total and Permanent Disability Discharge

The Veterans Total and Permanent Disability Discharge is a forgiveness program available to those with a service-related disability. This program will release you from your loans and is available for most types of loans. 

To qualify, you must prove that you are permanently disbaled. You’ll need to submit documentation from the Department of Veteran Affairs showing that you have a service-related disability and are unemployable due to that disability. After securing that documentation, contact Nelnet, the company that assists the Department of Education with this program, for more information on your options if you believe you are eligible.

 To apply, fill out the application available on the Federal Student Aid website. 

Public Service Loan Forgiveness 

Public Service Loan Forgiveness (PSLF) is a program designed to forgive the student loans of public service workers, including military members and veterans. The PSLF Program will forgive all of your remaining debt after you meet the eligibility requirements for the program. 

To qualify, you must work full-time for a qualifying U.S. government employer, or a tribal government, or a non-profit organization. You have to make 120 on-time payments under a qualifying repayment plan on your loans before you can get your loans forgiven. Additionally, these payments must have started after October 1, 2007. 

While Direct Loans are the only federal loan type that qualify, you can consolidate other federal loans into a Direct Consolidation loan to qualify instead.

To apply, fill out a PSLF form and an employment certification form. The application and the employment form should be sent to FedLoan Servicing. 

Other Ways to Manage Your Student Loan Debt as a Member of the Military 

If you don’t meet the requirements for any of the above military student loan forgiveness programs, don’t fret. There are still other things you can do to help manage your student loans. 

Opt In to an Income-Driven Repayment Plan 

An Income-Driven Repayment (IDR) plan is a federal loan repayment option. It bases your monthly payment on a percentage of your discretionary income as opposed to your loan amount. 

There are currently four different IDR plans available to students with federal student loans. They are Income-Based Repayment (IBR), Pay as you Earn (PAYE), Revised Pay as you Earn (REPAYE), and Income-Contingent Repayment (ICR). These IDR plans are great because it makes it easier to pay back your loans. 

Talk to your federal loan servicer about how to get started with an IDR plan.

Refinance Your Loans for a Lower Interest Rate

Another option you have to manage your debt is to refinance your student loans. Refinancing is the process of a lender paying off your loans and giving you a new loan with better terms. While you can refinance both federal and private student loans, it is an especially good option for private student loans. Unlike federal loans, private loans aren’t eligible for forgiveness programs or income-driven repayment plans. If you do decide to refinance your federal student loans, you will lose out on federal benefits.  

Qualified applicants will need at least a good credit score and stable income. To get started, use Sparrow. Sparrow is a student loan search tool that connects you with lenders. Many of our partnering lenders offer great refinancing options. By filling out our application, you’ll get matched with what you best qualify for. 

Cap Your Interest Rate Through the Servicemembers Civil Relief Act 

With the Servicemembers Civil Relief Act, you can cap your interest rate on your student loans. This means that during an active duty period, the highest interest rate you can be charged is 6%. 

This benefit only applies, however, to loans taken out before your active duty service. For federal loans, this means you must have been in active duty status on or after August 1, 2008. Private student loans do not have this restriction. Additionally, there are no fees or charges that will be made with this benefit. 

To get started, fill out the application online or download the form and mail it to Navient. 

Frequently Asked Questions About Military Student Loan Forgiveness 

1. Do Military Members Qualify For PSLF? Yes, military members do qualify for PSLF. To be eligible for PSLF, you need to be a public service worker. A public service worker is anyone who works full-time for a qualifying U.S. employer. The military would be a qualified U.S. employer.

2. Do You Pay Student Loans While Deployed? No. You can get military service deferment on your federal loans if you are called to active duty. The military service deferment is limited to 60 months and 180 days after discharge from service. Talk to your student loan servicer to get a deferment request form. 

3. Do Veterans Have to Pay Back Student Loans? Yes, they do. All student loans have to be paid back unless you qualify for forgiveness programs such as PSLF. 

Final Thoughts from the Nest

If you are finding your student debt tricky to handle as a service member, know that there are a variety of military student loan forgiveness programs available to you as well as other options to help you manage your debt. If you decide to go with the option of refinancing, remember that here at Sparrow, we’ve got your back. To get started, fill out the Sparrow application.

The idea of an employer giving you extra money to pay off your student loan debt may seem too good to be true. But in fact, around 17%¹ of employers offer student debt assistance and another 31% plan to offer it in the future.

Regardless of how much you owe, an employer throwing extra cash towards your debt is quite a compelling employee benefit.

So, we’ve partnered with Dwindle Student Debt to help you find just that. Dwindle is focused on helping you find a job that helps you pay down your student debt or lower the cost of your education. 

With the help of Dwindle’s robust job page, we’ve compiled the top 30 companies offering student loan repayment assistance to help get your job search started. 

30 Companies Ready to Help Pay off Your Debt

#1: Aetna

Who they are: Aetna is a well-known, American healthcare company that sells health insurance to individuals, families, employers, and healthcare providers.

What they offer: In addition to a strong tuition reimbursement program, Aetna also helps employees during debt payoff by matching employees’ student loan payments. For full-time employees, Aetna will match up to $2,000 per year in student loan payments, for a lifetime maximum of $10,000. For part-time employees, Aetna will match up to $1,000 per year with a lifetime maximum of $5,000. 

Who is eligible: To be eligible, employees must have earned a U.S.-based undergraduate or graduate college degree from an accredited program within 3 years of applying to the program.

#2: Abbott

Who they are: Abbott is an American medical device and healthcare company.

What they offer: Abbott typically requires all employees to contribute, at minimum, 2% to their 401(k). However, Abbott’s Freedom 2 Save program allows employees with student debt to divert the 2% minimum 401(k) contribution to their student loan payments, and in return, Abbott will contribute 5% to the employee’s 401(k). While Abbott’s contribution doesn’t go directly to the employee’s student debt, it allows employees to pay off their debt faster while keeping their 401(k) in check.

Who is eligible: Full-time Abbott employees are eligible.

#3: AlloSource

Who they are: AlloSource is a healthcare company with a mission to help patients heal through innovative cellular and allograft research.

What they offer: AlloSource partners with Tuition.io to contribute a percentage to the principal balance of the loan.

Who is eligible: To qualify, employees must have worked with AlloSource full-time for at least a year.

#4: Ally Financial

Who they are: Ally Financial is a leading digital financial services company offering a wide variety of education benefits for its 8,500+ employees.

What they offer: Ally offers employees $100 a month towards an eligible 529 College Savings Plan and $100 per month towards student loans, with a combined lifetime maximum of $10,000.

Who is eligible: All Ally employees are eligible.

#5: Andersen Global

Who they are: Andersen Global is a financial consulting company for both individuals and businesses.

What they offer: Andersen Global partners with Gradifi to provide employees up to $12,000 toward student loan repayment. The amount is contributed in monthly stipends of $100, followed by a $6,000 lump sum payment after five years.

Who is eligible: Employees must have been with the company at least one month and working at least 20 hours per week to be eligible.

#6: American Family Insurance

Who they are: American Family Insurance (AmFam) is a mutual insurance company offering personal and business insurance.

What they offer: AmFam offers $100 per month towards student loan repayment, with a lifetime maximum of $10,000.

Who is eligible: AmFam employees who have graduated with an associate’s degree or higher are eligible.

#7: Atticus

Who they are: Atticus is a Public Benefit Corporation with a mission to improve the legal system by offering online legal advice from experts.

What they offer: Atticus offers up to $1,200 per year in student loan repayment assistance. 

Who is eligible: It appears as though all Atticus employees are eligible, however, there may be additional eligibility requirements.

#8: Carhartt

Who they are: Carhartt is a men’s and women’s apparel company.

What they offer: Carhartt partners with Tuition.io to provide employees with $50 per month towards student loan repayment, with a lifetime maximum of $10,000.

Who is eligible: It appears as though all Carhartt employees are eligible, however, there may be additional eligibility requirements.

#9: Carvana

Who they are: Carvana is an online used car retailer.

What they offer: Carvana partners with Gradifi to provide employees with $1,000 per year towards student loan repayment.

Who is eligible: It appears as though all Carvana employees are eligible, however, there may be additional eligibility requirements.

#10: Chegg

Who they are: Chegg is a well-known education technology company.

What they offer: Chegg offers employees up to $6,000 per year in student loan repayment assistance.

Who is eligible: All Chegg employees with student debt are eligible for their $1,000 per year student loan repayment assistance. Additionally, employees that have been with Chegg for at least two years are eligible for up to an additional $5,000 per year in student loan repayment assistance. 

#11: Connelly Partners

Who they are: Connelly Partners is an advertising agency.

What they offer: Connelly Partners teamed up with Gradifi to provide employees with up to $100 per month toward their student loan payments. This benefit is in addition to Connelly Partners’ $1,000 signing bonus, which can be used toward student loans. Employees who reach a five-year anniversary with Connelly Partners will also receive another $1,000 cash bonus toward their student loans.

Who is eligible: All Connelly Partners employees are eligible for the $100 per month assistance and the $1,000 signing bonus. Employees must have been with the company for five years to qualify for the $1,000 cash bonus.

#12: Estée Lauder

Who they are: Estée Lauder is a well-known American manufacturer of makeup, skincare, fragrance, and hair products.

What they offer: Estée Lauder provides employees with $100 per month in student loan repayment assistance, with a lifetime maximum of $10,000.

Who is eligible: Employees of Estée Lauder, including its subsidiaries Clinique, MAC Cosmetics, and Origins, are eligible for student loan repayment assistance.

#13: Fidelity Investments

Who they are: Fidelity Investments is an American financial services corporation.

What they offer: Fidelity Investments offers employees student loan benefits through their Step Ahead Student Loan Assistance Program, which provides up to $2,000 per year in student loan repayment assistance, with a lifetime maximum of $10,000.

Who is eligible: Employees who have been with the company for at least six months are eligible. 

#14: First Republic

Who they are: First Republic is a private bank and wealth management company.

What they offer: First Republic partners with Gradifi to offer their employees a tiered student loan repayment assistance program. Employees are initially eligible for $100 per month towards their student loans. This amount increases each month the employee utilizes the benefit, with a maximum of $200 per month. There is no lifetime maximum contribution.

Who is eligible: It appears as though all Carvana employees are eligible, however, there may be additional eligibility requirements.

#15: Google

Who they are: Do we need to explain who Google is?!

What they offer: Google offers their employees up to $2,500 in student loan repayment assistance per year.

Who is eligible: All Google employees are eligible.

#16: Hulu

Who they are: Hulu is a popular streaming service.

What they offer: Hulu offers employees $1,200 per year in student loan repayment assistance.

Who is eligible: All Google employees are eligible.

#17: Kronos

Who they are: Kronos is a software company catering to management and human resources fields.

What they offer: Kronos offers employees student loan repayment assistance, however, employees have to contact the benefits department to see how much they qualify for.

Who is eligible: It is unclear which Kronos employees are eligible.

#18: Live Nation

Who they are: Live Nation is an American concert promoter and venue operator company.

What they offer: Live Nation matches employee’s student loan payments up to $100 per month, with a lifetime maximum of $6,000.

Who is eligible: To qualify, employees must have been with the company for at least six months.

#19: Lockheed Martin

Who they are: Lockheed Martin is an American aerospace, arms, defense, information security, and technology company.

What they offer: Lockheed Martin offers new graduates student loan repayment assistance through their Invest in Me program. The program provides eligible employees with $150 per month for up to five years. While intended to be used for student loan repayment, the money can be used toward other expenses.

Who is eligible: To be eligible, employees must be a recent graduate, a full-time hire, and working in the Missiles and Fire Control department.

#20: New York Life

Who they are: New York Life is the third-largest life insurance company in the United States. 

What they offer: New York Life offers all eligible employees up to $10,200 in student loan assistance over a five year period.

Who is eligible: To be eligible, employees must be non-officers with student loans working under the New York Life Insurance Company, NYL Investors, New York Life Investment Management, or Index IQ.

#21: Nvidia

Who they are: Nvidia is a technology company and global leader in artificial intelligence. 

What they offer: Nvidia offers employees $500 per month toward student loans, with a lifetime maximum of $30,000.

Who is eligible: Both full- and part-time employees are eligible if they have worked with Nvidia for at least three months and work at least 20 hours per week.

#22: Parallon

Who they are: Parallon is a leader in healthcare and business operations services, providing hospitals and healthcare systems with tools to improve their business performance.

What they offer: Parallon offers employees $50-$100 per month in student loan repayment assistance. Parallon has not specified any lifetime maximums.

Who is eligible: Full-time Parallon employees are eligible for $100 per month, while part-time employees are eligible for $50 per month. 

#23: Peloton

Who they are: Peloton is a well-known fitness technology company.

What they offer: Peloton offers employees $100 per month. The program does not appear to have a lifetime maximum.

Who is eligible: Peloton does not specify which employees are eligible. 

#24: Penguin Random House

Who they are: Penguin Random House is an American book publisher and the largest general-interest paperback publisher in the entire world.

What they offer: Penguin Random House offers employees $100 per month in student loan repayment assistance, with a lifetime maximum of $9,000.

Who is eligible: Only full-time employees who have been with the company for at least one year are eligible.

#25: PricewaterhouseCoopers (PwC)

Who they are: PricewaterhouseCoopers (PwC) is a multinational network of firms bringing businesses assurance, tax, and consulting services.

What they offer: PwC offers employees up to $1,200 per year in student loan repayment assistance, with a $10,000 lifetime maximum.

Who is eligible: All PwC employees are eligible. There is no requirement to have worked with PwC for a specific length of time before being eligible.

#26: SoFi

Who they are: SoFi is an American personal finance company and online bank providing customers with a variety of financial services.

What they offer: SoFi offers employees up to $200 per month in student loan repayment assistance, with no lifetime maximum.

Who is eligible: All SoFi employees are eligible.

#27: Staples

Who they are: Staples is an American retail company specializing in office supplies.

What they offer: Staples offers employees $100 per month in student loan repayment assistance, for a maximum of 36 months.

Who is eligible: To be eligible, Staples employees must be deemed qualifying and high-potential by the company. It is unclear what makes an employee high-potential.

#28: Terminix

Who they are: Terminix is one of the largest pest control companies in the world.

What they offer: Terminix offers employees $50 per month in student loan repayment assistance.

Who is eligible: Both full-time and part-time employees may be eligible, however, Terminix does note that the program is only available to qualifying employees. It is unclear what makes a Terminix employee qualify.

#29: The U.S. Government

Who they are: Shall we explain this one?

What they offer: The U.S. federal government offers employees up to $60,000 in student loan repayment assistance, paid in $10,000 increments over the course of six years.

Who is eligible: U.S. government employees are eligible if they have federal student loans and agree to sign a contract agreeing to work for the government for at least three years. U.S. government employees will still qualify for federal loan forgiveness programs such as Public Service Loan Forgiveness.

#30: Weedmaps

Who they are: Weedmaps is a California-based cannabis technology company.

What they offer: Weedmaps offers up to $1,000 a year in student loan repayment assistance.

Who is eligible: Weedmaps does note their student loan repayment assistance benefit on full-time roles. It is unclear whether part-time Weedmaps employees are eligible or what other criteria full-time employees have to meet to be eligible.

Why Do Companies Offer Debt Repayment Benefits? 

While many employers offer student loan repayment benefits as a way to attract and retain talent, there are more widespread impacts such as improving company culture and employee happiness. 

How to Find Employers That Will Pay Off Your Debt

While this list is a solid starting point, we recommend keeping up with Dwindle Student Debt’s growing job page. Dwindle Student Debt allows you to explore a list of companies with student loan repayment benefits, ensuring that you stay up-to-date on potential employment opportunities as more companies add student loan repayment benefits to their offers.

Final Thoughts from the Nest

Whether you’re just beginning the post-grad job search or you’re looking to change companies later in your career, finding a company that offers student loan repayment benefits is a solid choice. To explore additional opportunities with other top companies, check out Dwindle Student Debt.