Student loan debt is the largest financial issue faced by people in their 20’s and 30’s today. If you are one of them then you might be looking for ways to reduce or eliminate your debt.

Americans have more than $1.2 trillion in student debt, which is more than the total amount of auto loans and credit cards. A college education provides an opportunity for higher income, however, getting a degree is expensive and most consumers can’t afford it on their own. That’s why they take out loans to cover these expenses.

Today, many people are having trouble keeping up with their debt payments. They want their debts gone as soon as possible, but they don’t know how to make this happen. If you are under the age of 30, here are some tips to help you reduce your student loans.

1. Look for a Forgiveness Program

The first way to reduce student loanis to find out if you qualify for any federal forgiveness program. The federal government offers programs to qualified individuals with loans handled by the Department of Education or any of the affiliated loan providers.

The most popular program is the Public Service Loan Forgiveness, which is given to people who worked in the public sector for at least ten years. To qualify for the program, you should have worked for a government agency, non-profit organization, or a public-school system. Law enforcement and public safety officers are also qualified for this program.

Aside from the federal government, individual states also provide forgiveness programs. Some states even offer more than one initiative to cover various types of debts. For instance, Kansas offers a program for living in a specific area of the state.

In California, health professionals, dentists, and doctors qualify for a forgiveness program. Texas has a program for speech therapists, doctors, nurses, professors, and teachers, just to name a few. Be sure to check with your state to find out if you qualify for a program.

2. Pay More than the Minimum

Another way to reduce student loans faster is to pay more than the minimum amount required. By doing this, you decrease the remaining balance and accumulate less interest. The more you take off the balance, the more you trim down on interest payments. At this stage of your life, additional money earned should go toward paying off loans. If you get bonuses from work, use them for repaying college debt.

Federal loans have a ten-year repayment period that starts as soon as you get out of college. Private loans in installment from direct options have varying terms. The good news is that there’s no penalty for making extra payments. You can make extra payments anytime without worrying about additional fees.

Before making extra payments, contact the servicer first. Make it clear that extra payments go toward reducing the balance, and not applied to the payment of the next due date.

3. Refinance Loans

Refinancing allows you to pay off loans without having to make several different payments. You are ready for refinancing if you have a steady job and good credit. The lending company can merge several loans into one with lower rates and a shorter term.

The refinanced loan might have a higher monthly installment, but you will be able to repay it faster. It is also more convenient because you only need to pay a single bill each month. To qualify for refinancing, your credit must be above 690, have a steady income, and a good history of paying bills on time.

The more creditworthy, the better. If you have bad credit, look for an individual willing to cosign for refinancing with you. That person must have prime credit to ensure you get the best terms and conditions.

4. Get Help from Your Employer

Many employers offer tuition reimbursement to help their employees pay for their education. Most people under 30 use this method to earn their degree while working full time. One example is Starbucks, which offers a degree program as an employee benefit. Some organizations provide repayment programs where they pay a part of their employees’ student loans.

Working while still in college is one of the smartest things you can do to reduce debt. When looking for a job, ask potential employers if they have any tuition reimbursement initiatives. Most of these programs require you to take out a loan and then submit proof of completion. The employer will reimburse part of the debt through your paycheck.

If you have already completed your course of study and still have tuition debt to pay, look for employers who provide signing bonuses and other benefits that can help reduce loan balance.

5. Pay Off Loans with High Interest Rates First

If you have more than one student loan, it is wise to pay off the one with the highest interest rate first. That way you can save more on interest payments. Pay the minimum amount for other debts, while making extra payments on the high interest obligation will make the repayment process go faster.

6. Pay the Capitalized Interest

It is important to note that loans start accumulating interest even when you are in college unless the federal government is subsidizing them. This interest capitalizes when you complete your degree, which means the balance increases and will be the base of the interest.

You should consider making payments during the time the interest is still accruing to prevent its capitalization. Another way to prevent capitalized interest is to make a lump-sum payment before the end of the grace period. While this will not reduce the amount of the debt, it will help keep the smaller balance.

7. Use a Repayment Plan Based on Ability to Pay

It is important to find a repayment plan that suits your ability to make the monthly payments. After completing a degree, you are automatically part of a standard repayment plan that has a ten-year period.

What most graduates don’t know is that they can change the repayment plan and that’s why they stick to it, even if they can’t afford to repay the debt within the period. There are many plans to choose from that will make the financial obligation more manageable.

If your plan after graduation is to get a steady job right away, then choose the graduate repayment plan that has a lower upfront payment but increases over time. If you think you need some time to repay the debt completely, then consider getting an extended plan.

8. Interest Reduction Schemes

Some lenders offer interest rate reductions for their clients who sign up for auto-pay. In this case, the creditor automatically takes the payment from the savings account on every due date. As an incentive, the provider gives a rate reduction of around.25 percent. Incentives vary from one company to another. Check with your provider to find out about their reduction schemes.

Making smart financial decisions and working hard while in your 20’s will lead to a great reduction in your student loan debt. Following the tips provided in this article will ensure you pay off your financial obligations in no time. Then you have enough time to save up for your retirement.

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January 7, 2019