If you’ve been researching the best way to pay off a large student loan balance, you’ve likely been told to pay it off as quickly as possible with the lowest interest rate possible. If this were a normal debt that would be appropriate, but for most borrowers, especially high balance borrowers, this is usually the wrong approach. Federal Student Loans work differently than any other debt out there and traditional financial advice just doesn’t take into account the unique repayment opportunities that provide substantial benefits, subsidies, and loan forgiveness.
Bottom line is, it is a very expensive mistake to manage federal student loans like they were a car loan, credit card or mortgage debt.
Now if you have a very high income, over $200k per year, and expect it to stay that way for 10+ years, the cheapest repayment strategy may likely be to refinance the loans with a private lender to get a lower interest rate and pay them off as fast as possible.
But for everyone else, the far less expensive strategy is to leverage all of the benefits of the Department of Education repayment programs, get the lowest monthly payment allowable, and make payments and stay actively enrolled over 20-25 years to receive full student loan forgiveness on the remaining debt. If you work full time for a non-profit or the government it only takes 10 years until forgiveness occurs.
Unfortunately however, knowing which program and filing strategies give you the most savings, and then doing the annual paperwork and servicer follow up to ensure all the mistakes they’ll make are corrected has proven to be a serious obstacle for borrowers so far.
I wish this wasn’t true but according to a report released in March 2021, the National Consumer Law Center (NCLC) reported that of the 2 million people who should have qualified for student loan forgiveness over the last 25 years, only 32 actually received their forgiveness. It’s an abysmal and insane figure. And the main reason for it seems to lie in the 61% servicer error rate reported by the inspector general in their latest audit.
A single servicer error that goes un-corrected can lead to the borrower being kicked out of their repayment program and losing the program repayment track record needed to qualify for forgiveness.
So what’s the solution? Can student loan borrowers that have six figures of student loan debt that aren’t earning huge incomes get a good deal on repayment that will actually come to fruition?
The answer is a resounding YES. But when your balance is that high it is highly recommended to work with a credible student loan repayment expert to ensure the best strategies are put into place and can do the paperwork and servicer follow up for you to make sure they are implemented.
As far as we know, we are actually the only firm that has maintained a near flawless reputation and does both strategy and implementation for clients. There are some others who will help you find the optimal repayment strategies, but what good is the theory if you never get the follow through and the promised loan forgiveness?
If you’d like to find out if you’re a good candidate for our services, schedule a free evaluation with one of our professionals. We’d love to help you if we can.
You may have a loan, but you’re not alone!
Founder, Student Loan Tutor
What is student loan forgiveness? In this article, we cover student loan forgiveness, student loan repayments, and how you can save more.
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