4 Hot Tips for Refinancing Your Parent PLUS Loans

Well they did it — they made it to college. While your children may be busy with college classes or working at the job that college education afforded them, you may be making payments on federal PLUS Loans for parents for many more years to come.

Parent PLUS loans are pretty easy to get and many schools “packaged” these loans for parents into students’ financial aid award letters. Those conveniences come with a hidden price, though. Repayment options that may be great for some but not beneficial to others and interest rates that are often higher than financially savvy consumers deserve and that vary each academic year.

Today, education loan refinance rates are often much lower than what you may be paying for your PLUS loans.

When Should You Refinance Your Parent PLUS Loans?

Although refinancing federal parent PLUS loans may not be the right choice for everyone, here are four examples of when doing so might be the right thing for you.

1. When you want a single lower rate

Parent PLUS loans are fixed-rate loans, so the rate for the school year your child used the funds is the rate that specific loan will always be. For example, PLUS loans taken out for the 2018–2019 school year have fixed rates of 7.60%.

And because rates for new PLUS loans change every year, if you have more than one parent PLUS loan, each loan likely has a different rate. Since 2006, rates have been as low as 6.31% and as high as 8.50%.

Refinancing PLUS loans is more common than ever, and it’s easy to combine multiple loans into one new loan with one rate. And, with private lenders, the rates you are offered are based on your credit, not a number set by the federal government for everyone. The better your credit, the lower the interest rate you will be offered.

Keep in mind: Many lenders offer online tools to provide you with a rate quote or pre-qualification offer. Some companies make you create an account before getting their information, so be sure they are only making a “soft” inquiry into your credit history or that their website states the information will not impact your credit score.

Want to see what rates you would get with our refinance loan?

If you don’t qualify to refinance your parent PLUS loans with a private lender, you have the option to consolidate those federal loans through the U.S. Department of Education. If you apply for a Direct Consolidation Loan, the interest rates of your current federal loans are used to determine your new consolidation loan rate, though, so you may not see a lower overall rate. Learn more about the differences between consolidating and refinancing with our Beginner’s Guide to Student Loan Refinance.

2. When you want to lower your payment

Parent PLUS loans are owned by the federal government, and, along with being fairly easy to get, they have a basic repayment term of 10 years. The federal government offers extended repayment, up to 25 years, to borrowers who owe more than $30,000 in PLUS loans. But what if your current remaining term or the amount you owe each month doesn’t work for you?

If you are looking to lower your payments, whether it’s to save for today, help other children with college costs or plan for your retirement, refinancing can get you a longer term. Many lenders have terms ranging from 5 to 20 years with multiple options in between.

The trade-off for a longer term with a refinance loan is that you will likely pay more in interest over the life of the loan. However, reputable lenders won’t penalize you for paying extra whenever you wish, which will reduce overall interest costs. You may feel like a longer-term loan, which doesn’t require high monthly payments and allows for extra payments at any time, provides a financial safety net.

If you’d like to see how repaying at a lower rate or with a different repayment term can impact your overall costs and monthly payment, or if you want to learn more about the benefit implications of refinancing federal loans into a new private loan, check out our Beginner’s Guide to Student Loan Refinance.

Keep in mind: Refinance loans with shorter term lengths typically provide the lowest rates that you see advertised. But even loans with longer terms often have rates lower than federal PLUS loan rates.

3. When you need a change

Refinancing your existing parent PLUS loans (or any other education loans in your name) lets you reset your loan; at today’s terms and on your terms.

When you and your child were reviewing financial aid award letters and trying to understand the different types of financial aid and student loans was likely a busy, stressful time. When you first signed paperwork for those loans, you may not have had enough time to fully consider the differences between federal loans for students and PLUS loans for parents and the financial impacts of taking out parent PLUS loans.

Today is a new day, and you can find that right mix of fixed interest rates and terms to set yourself up for financial success going forward. Take time to check out your different options, and determine how different rates, payments and terms will impact your short- and long-term budgets. Without the stress of making decisions quickly to pay college bills on time, you can find the right loan for you today.

Keep in mind: The better your credit, the lower rates you will be offered for the different loan terms available. The great thing with the refinance loans offered by most lenders is that you are able to select the rate and term combination that is right for you.

4. When it’s not you, it’s them. (The servicer that is.)

Education loans are long-term financial commitments, and like all long-term commitments, your partner plays an important role. With federal parent PLUS loans, you probably didn’t pick that partner, and maybe it’s just not working out. Maybe they aren’t giving you the attention you deserve. Maybe they’re a large corporation that cares more about profits than customer service. Or maybe they are constantly trying to sell you more or different financial products.

Whatever the reason, you can get away and pick your new partner. Lenders today offer a range of benefits like rate reductions for automatic payments or for military service. Many also have policies in place to forgive loans in the event of unfortunate circumstances. Now’s your chance to take a look around and make the choice your own.

Start by learning more about us and all the details on our refinance loan.

Keep in mind: Some lenders detail their repayment benefits and policies on their websites, while you may have to call and ask others for more details. Do you want to work with a lender who is transparent and provides all the information you are seeking in the manner you prefer? If you speak with representatives on the phone, are they pleasant and helpful or do they try to get you off the phone quickly without providing the information you need?

Ready to refinance?

Regardless of your situation, if you’re considering refinancing your parent PLUS loans, it’s important to spend time weighing your options and finding the right loan and lender for you. What do you not like about your current loans? What does work now? What would be ideal in a new refinance loan?

Want to know how we can help?

Iowa Student Loan offers the Reset Refinance Loan with a rates and terms to help meet your needs. We are a nonprofit business that focuses on Iowa students and families, but we proudly provide “Iowa nice” customer service no matter where you call home. Pre-qualify today and we’ll provide you with rate and term options specific to your situation.

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By: Iowa Student Loan

Beginner’s Guide to Refinancing Your Student Loans

Repaying student loans can be stressful but refinancing may help make your life a bit easier. Here are three reasons refinancing may be a good choice for you.

  • Refinancing may lower your interest rate to help you reduce overall costs.
  • A new loan with a longer term may lower your monthly payment, which can help with other debt obligations or living expenses.
  • Refinancing lets you simplify repayment by bringing all your student loans together so you only have one student loan payment a month.

There are many things to consider before jumping into refinancing, though. Use this guide to determine whether or not it is a good option for you.

How does student loan refinancing work?

Student loan refinancing allows you to gather all or some of your loans into one new loan, often at a lower interest rate that may help you pay less over time or provide you with a longer repayment term that will lower your monthly payment. This is a great option if you have multiple student loans, but you can also refinance if you have just one loan.

Is there a difference between student loan refinancing and consolidation?

Yes; although the terms are often interchangeable. Student loan consolidation most often refers to the federal program. Student loan refinancing usually refers to programs offered by private lenders.

What is student loan consolidation?

Consolidation typically refers to combining your federal student loans into one new federal loan with a new term. It does not necessarily provide a lower interest rate as your new rate will be the weighted average of the interest rates on the loans being consolidated. Student loan consolidation is not usually considered a money-saving option. With a consolidation loan, though, you may be eligible for different income-driven repayment plans and certain loan forgiveness programs as long as PLUS Loans for parents are not included when you consolidate.

How is student loan refinancing different?

Refinancing is offered by some banks, credit unions and other specialized student loan lenders. This type of loan allows you to combine federal and / or private loans together for a new rate and term. Repaying with a lower interest rate, and thus lowering your overall costs, is one of the main benefits of refinancing. Rates are generally determined based on your current financial strength. Cosigners can help you qualify if you are fresh out of college and don’t have much credit built up yet as well as help you obtain lower rates.

  Federal Direct Consolidation Loan Private Student Refinance Loan
What type of student loans are eligible? Federal Federal and private
Do I need to meet specific credit criteria? No Yes
Can this simplify repayment? Yes Yes
Will this reduce my interest rate? Not significantly Possibly; depending on your current loans and your credit score today

What are your student loan refinancing goals?

In general, most people only think about refinancing if they believe they’ll get a lower interest rate, but that is not the only reason to refinance. If you’re considering a refinance loan, it’s important to find the loan that can help you meet your goals.

Do you want to pay less overall?

Refinancing your loans to repay at a lower interest rate is the most common reason people state they want to refinance. If that is your goal and you qualify for a lower interest rate loan, refinancing can definitely help you pay less overall. Just be sure the new loan term is similar to the remaining terms on your existing loans. If you qualify for a lower interest rate but choose a longer repayment term than your current loans, you likely will not pay less over the life of a loan.

You can also choose a shorter repayment term to reduce your overall cost, although that often means higher monthly payment amounts.

The best way to reduce costs over the life of the loan, if you can afford the higher monthly payments, is to refinance to a loan with a lower interest rate and a shorter repayment term.

Are you looking to lower the amount you pay each month?

If your current monthly student loan payment amount is too high or you’re struggling to make payments on time and have enough money left over for living expenses, refinancing to a new loan with a longer repayment term is an option. You will likely pay more over time as interest accrues daily on student loans. This means that the longer you’re repaying a loan, the more interest you will pay. One strategy to keep in mind if you need lower payments now and decide to refinance to a longer repayment term is to pay extra as your budget changes in the future. That way your loan can be paid in full sooner and you will pay less in interest.

Would you like to only make one payment each month?

Another popular reason to consider refinancing is to stop making multiple payments to different lenders each month. If you refinance all your loans into one new loan, you will only have to make one payment each month instead of remembering to pay all the lenders monthly.

Are there drawbacks to refinancing student loans?

Refinancing may help you save money and simplify student loan repayment, but there are a few things to consider before refinancing. Not all student loans are the same and you’ll want to research the benefits and repayment options different refinance lenders offer.

Federal student loans have benefits and repayment options that are not available for private student loans. If you choose to refinance federal loans into a private loan, you will lose the federal loan benefits that go along with them. Most federal student loans come with different options for repayment, such as income-driven repayment plans, as well as more deferment and forbearance options and loan forgiveness programs for certain borrowers. These vary depending on the type of federal loan. Federal PLUS Loans for parents do not have the same benefits as federal loans made to student borrowers.

If you do not foresee any difficulty making your minimum payments and you do not intend to apply for a federal loan forgiveness program, then refinancing federal loans into a new private refinance loan may be a viable option for you.

Private student loans vary by lender. Research your current lender’s repayment plans and the options for you to postpone payments should you run into a short period of financial hardship, as you may lose those benefits if you refinance. A new refinance lender may offer similar or different benefits and assistance options.

Will applying to refinance your student loans hurt your credit score?

Refinancing student loans doesn’t typically impact credit scores significantly.

When considering your options, check to see if the lender offers a pre-qualification option that provides you with the rates and terms you are eligible for before making a decision to apply. Most of the time, this step does not impact your credit at all since it only involves a soft credit inquiry.

Once you complete an application and authorize a full credit inquiry, your credit score may be impacted a bit but typically only by a few points. If, however, you apply for loans with multiple lenders over a period of time, your credit score may be impacted more.

What do lenders look at when you apply to refinance?

Lenders review a few main factors about your credit history when you apply to refinance as they want to know you will be able to repay your new loan. As with most loans, they consider your credit score and payment history as well as your income and debt levels.

Before refinancing, you may want to know your credit score to see if you are eligible for better rates. It’s important to understand, though, that credit scores vary based on the consumer reporting agency and the calculation used, so the credit score you see from one source may not match the one the lender uses.

What steps should you take to refinance your student loans?

If you think refinancing is a good option for you, take these steps to refinance your student loans.

  1. Determine your goals when it comes to student loans.
    • Are you looking to lower your interest rate?
    • Do you want to lower your monthly payment amount?
    • Is simplifying student loan repayment so you have just one monthly payment important?
    • Do you hope refinancing will result in a combination of the above?
  2. Review your current student loan status.
    • Do you have federal and private, only private, or only federal student loans?
    • Who is your loan servicer?
    • Are your current interest rates fixed or variable?
    • What are your current interest rates? How many years are left until your current loans are fully repaid and what are your payment amounts now?
  3. Seek the best lender to fit your financial needs.
    • Does the lender provide customer service on its own loans? Or will your loan be sent to another company for servicing?
    • Does the lender have a good reputation for customer service?
    • Is the lender solely focused on student loans? Or does it have other products they’d like to sell you?
    • What sort of repayment plans, hardship assistance options and benefits does the lender offer?
  4. See if you can pre-qualify or get a rate quote before you complete an application. This will let you assess your new interest rates and repayment term options and determine if refinancing is the right option for you.
  5. If you decide to proceed, submit an application to be approved for refinancing.

Feelin’ good about refinancing?

Complete our pre-qualification process to see what rates you can receive. There’s no credit impact, and you only have to answer a few quick questions to reset your student loans and reduce your stress!

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By: Iowa Student Loan

Everything You Need to Know Before Refinancing Your Student Loans

worried man and woman staring at a bill, text reads everything you need to know before refinancing your student loans

Student loans can be stressful, especially if you have a mix of federal and private loans as well as multiple lenders or loan servicers you make payments to each month. Adding to the challenge is that each loan can have a different interest rate and a different type of rate, like variable rates that change every month or quarter in comparison to fixed rates that don’t change. That’s a lot of information to keep track of month after month.

By now you’ve probably heard about student loan refinancing, but is it the right option for you?

What is student loan refinancing? How does it work?

When you refinance your student loans, you receive a new private loan with a new interest rate and a new repayment term to pay off your existing student loans. This is a great option for people who have private and federal student loans, but you can also refinance if you have just one or the other. Refinancing allows you to gather all or some of these loans into one new loan, often at a lower interest rate that will save you money or a longer repayment term that will lower your payment.

pad of paper, text reads student loan refinancing

What is the difference between refinancing and consolidation?

These two words are frequently used interchangeably but refinancing and consolidation are different. Consolidation typically refers to combining all your federal student loans into one new federal loan. It does not necessarily lower your interest rate as your current rates will be averaged and rounded into one new rate. Consolidation makes is easier to manage multiple federal payments. Learn more about federal loan consolidation from Federal Student Aid.

Should I refinance my student loans?

There are generally three main reasons people consider refinancing their student loans. The biggest draw to refinancing is to lower the interest rate you’re currently paying and thus save money. The other two reasons you may want to consider refinancing are to lower your monthly payment amount to help with other debt obligations or living expenses and to simply bring all your student loans together so that you only have to make one monthly student loan payment.

It’s important to note that not everyone with student loans can save money. Before jumping into refinancing, spend some time determining if you can lower your interest rate and how much money you could actually save.

Because private student loans are not guaranteed by the government, private loan lenders take on more risk, so they typically look for candidates with good credit. If you’re a working adult with a decent income and pay your loans and other bills on time every month, you should consider refinancing. Look at lenders who are upfront with their loan details. At Iowa Student Loan, we’ll provide the different interest rates and options you’re eligible for based on your credit score and you don’t have to complete a full application to learn that.

You can pre-qualify in less than a minute with no impact to your credit score and no obligation to apply.

Pre-Qualify Now

What is a good student loan interest rate?

It can be difficult to tell if you’re getting a good rate on your student loans. The rates you’re eligible for will always vary based on your credit score and the terms of the loan. Typically, rates between 3.00% and 7.00% are good rates in today’s market. If you have a student loans with interest rates higher than 7.00%, you should definitely consider refinancing to see if you can receive better rates. Even if your current loans have rates between 5.00% and 7.00%, it may still makes sense for you to look into your refinancing options. Simply lowering your rate from around 5.50% to closer to 3.50% can make a significant difference in the amount you repay over the life of your loan.

How much student loan debt can I refinance?

This varies depending on the lender. Iowa Student Loan will refinance up to $200,000 in education debt. Be sure to research this before you choose a lender.

Is refinancing worth it? What are the risks?

Refinancing can help you save money and simplify student loan repayment, but there are some risks to consider before refinancing. The biggest risk to keep in mind is if you choose to refinance federal loans into a private loan, you will lose the federal loan benefits. It’s important to understand these benefits before you make any decisions regarding your federal loans.

What does this mean? Federal student loans come with more options for repayment, such as income-driven repayment plans, which use a borrower’s income and family size to determine the minimum monthly payment amount. Federal student loans also include more deferment and forbearance options as well as loan forgiveness programs for certain borrowers. These vary depending on the specific loan, but if you choose to refinance federal loans into a private loan, you will forfeit the federal benefits. If you do not foresee any difficulty paying your minimum payments, then refinancing is a viable option. It’s important to note that if you have federal PLUS Loans for parents, those loans do not offer the same federal benefits as federal loans made to student borrowers.

How do I refinance my student loans?

If you determine that you’re a good candidate for refinancing, you should shop around for the best refinancing option. Many lenders will ask you for some personal information (like your name, address and Social Security number) to give you an idea of the rates you’re eligible for and to pre-qualify you for their loan. After you’ve chosen the best fit, you will submit an application to officially be approved for refinancing.

graphic with text that reads credit score, income and debt-to-income ratio

Lenders look at a few main factors when you apply to refinance. As with most loans, they consider your credit score, income and your debt-to-income ratio. Before refinancing, you may want to look at your credit score to see if you are eligible for better rates. But understand that your credit score varies by different rating agencies and the calculation that is used, so they credit score you see from one source may not match the one the lender uses. It is also a good idea to limit other debt, such as credit cards, if possible. Lenders want to know you will be able to repay your new loan.

Will refinancing my student loans hurt my credit score?

Refinancing your student loans will not hurt your credit score, as long as you don’t refinance multiple times in a short period. When you apply to refinance your student loans, the lender will perform a hard credit inquiry to view your credit history and score. This shows up on your credit score and multiple inquiries close together can have a negative impact.

However, this does not mean you shouldn’t look around and compare different rates. Getting pre-qualified for student loan refinancing to see potential rates typically does not involve a hard credit inquiry. Lenders typically do what is called a soft credit inquiry to get an idea of your credit history and those do not impact your credit score.

What else, besides interest rates, should I consider when refinancing?

Student loan interest rates are important, but they’re not the only consideration. You’ll want to understand the repayment terms and consider the services each lender offers, such as ways they accept payment and if assistance, should you need it, is an option. If a lender has a reputation for being difficult to communicate with, this can be a major deterrent even if their rates are competitive.

Can I refinance my loans with Iowa Student Loan?

If you’re a good candidate for refinancing, we want to help you save money. Complete our pre-qualification process to see what rates you can receive. There’s no credit impact to pre-qualify, and you only have to answer nine quick questions to reset your student loans and reduce your stress!

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By: Iowa Student Loan

How to Pay off Student Loans Smarter (And Faster)

an excited college graduate, text reads pay off your student loans smarter (nd faster

Have you ever felt like you’ll be repaying student loans your entire life? You’re not alone. Racking up student loan debt can seem like the end of the world, but there are many manageable ways to chip away at your debt. With these tips, you can work toward paying off your student loans faster.

Refinance Your Student Loans to Save

Refinancing is an option everyone should look into as it is one of the most effective ways to save money on loans and pay them off quicker without breaking your budget.

When you refinance your student loans, you may get a lower interest rate, which would mean paying less interest. In some cases, paying less interest can mean you pay thousands less in interest charges over the life of the loan.

Iowa Student Loan provides a simple and very quick way to find out the rate you would qualify for without impacting your credit score. And, if you have someone with good credit who is willing to cosign a refinancing loan with you, you may qualify for an even better rate, saving you even more in interest charges.

Pre-Qualify Now

Pay More than Your Minimum Student Loan Payment

One of the most effective ways to pay your student loans off quicker is to pay extra money each month. Paying your minimum required amount might be enough to keep you in good standing but that means it will still take you the entire repayment term to get out of debt.

Adding just a little extra money each month can make a huge difference, and if you have the disposable income to pay an additional amount each month you’ll save money on interest and time in repayment.

Infographic titled how to conquer student loans with extra payments

Download this infographic as a PDF.

Make Additional Student Loan Payments Throughout the Year

If putting extra money toward your student loans each month is unattainable, you can instead make a few extra payments throughout the year. This is a great place to start if you’re still trying to figure out just how much you have left over in your budget each month. Set a goal to make an extra payment once every three or six months and slowly reduce your student loan debt.

Make Some Extra Money to Put Toward Student Loans

If you feel like you don’t have enough income to contribute extra to your student loan payments, consider getting a part-time job to help with your budget. The best kind of part-time job is one where you get to do something you enjoy. For some people that means taking up tutoring, babysitting or music lessons. Others prefer to work at a restaurant or get a job at the mall (did somebody say discount?). Find something that works well with your lifestyle and schedule.

Just remember to make a plan to manage your money. Come up with a schedule for saving money or putting it directly toward the balance of a loan as you reach a certain amount. It can be too easy to spend money that is designated for loans if it’s just sitting around, so make sure you develop a good system for accountability.

Creative Ways to Make Extra Money

If you don’t want to commit to a part-time job, try a more creative way to make money. Driving for Uber or Lyft allows you to earn some extra cash on your own time, without an ongoing commitment. Or, you may be able to find freelancing work on different websites that fit with your skills. These are just a few of the more unique ways to make extra money to put toward your student loans debt.

See if Loan Forgiveness Is an Option

Loan forgiveness is not necessarily too good to be true! Not all people are eligible for this benefit, but some careers are eligible for loan forgiveness. And if you’re eligible, loan forgiveness can save you thousands of dollars.

The federal government offers several loan forgiveness programs depending on your career and types of debt. Be sure to use a reputable source for information on federal student loan forgiveness programs, like the Federal Student Aid website.

Many states also offer loan forgiveness programs for teachers, nurses and workers in other high-demand but lower paying fields. Be sure to check out what the state you live in offers as far as loan forgiveness programs. Another source is the financial aid office at the college or university you attended; as those experts can help you find loan forgiveness or grant programs.

Don’t Blow Raises and Bonuses

Everyone loves getting a bonus or raise at work. You can put this money to good use by paying off your student loans. If you receive an unexpected bonus or raise and are not relying on the money for anything specific, put it directly toward the balance on your loans. These can really help to reduce your debt and won’t even break the bank.

Budget to Save Money in Other Areas

Not sure how people manage to have left over money after bills, loans and fun? You should try out budgeting! Budgeting is great because it establishes boundaries for your spending and helps you keep track of where your money is going. When you’re not tracking your spending, you might not even realize just how much you’re spending on silly things.

Once you’re actively managing your spending, you’re more accountable and you’ll likely find you have more money to spend — money that you can put toward paying off loans, saving or investing. Making small changes is the best place to start. Consider cooking more at home to save on eating out, making coffee at home instead of stopping on your way to work or renting a movie instead of seeing one in the theater. This monthly budget calculator can help you get started.

Tips to Chip Away at Debt

Remember these tips to work toward paying off your student loans faster:

  • Consider refinancing your existing student loans. See if you pre-qualify today.
  • Pay more than the required minimum monthly payment amount.
  • Make additional student loan payments when you can.
  • Put any extra earnings or bonuses toward student loans.

Get creative! With a little bit of effort your student loans will be gone before you know it.

Pre-Qualify Now

By: Iowa Student Loan

How to Keep Student Loan Debt From Taking Over Your Life

man with empty pockets, text reads how to keep student debt from taking over your life

So, you graduated college, and now you have a degree, a job and mounds of student loan debt. You’re not alone. Student loans can seem daunting and you may have to do more than cut out a Starbucks run here or there, but student loans do not have to take over your life! Understanding your student loans is the best way to conquer them. Here are some common student loan repayment questions and answers.

graphic of student loan bill, calculator, money and other items

When are my first student loan payments due?

This depends on the type of loan. Most federal student loans have a six-month grace period. This means, for the first six months after graduation or leaving school, you will not need to make loan payments. In addition, many private loan lenders offer a similar automatic deferment period, sometimes called a separation period, after college. However, this is not the case for all loans. Private loans that required full principal and interest payments or interest-only payments throughout college usually don’t have a separation period.

You may have loans with different requirements. Check your promissory notes or credit agreements to see if you have a grace or separation period. It’s very important to understand when your first payment comes due for each loan. If you don’t know or don’t have your original loan documents, call your lender or loan servicer. This is also a good time to ask what your minimum monthly payment is if you don’t already know. If possible, it’s a good idea to begin making payments of some amount during your grace period to save money and time in repayment. Being prepared with this information will give you time to plan ahead so you don’t miss your first payment.

How do I start paying off my student loans?

Starting something brand new, like paying off loans, can be very overwhelming. If you have a variety of student loans, figuring out who to pay and how much you owe is even more complicated. Like many students, you may have taken out both private and federal student loans with different terms.

Once you’re no longer in your grace period, the first step to managing your loans is organizing and understanding each loan you have. To begin, create an accurate list of all your loans, including interest rates, the repayment term length, the minimum monthly payment amount, and the lenders’ or loan servicers’ contact information. You may want to keep track of this information in a notebook or spreadsheet that you can easily access for reference. If you’re not sure if your loans are private or federal, don’t worry, you are not alone.

Some common types of federal loans include:

  • Stafford Loans (subsidized or unsubsidized)
  • Perkins Loans
  • Federal Direct Loans (subsidized or unsubsidized)
  • Parent PLUS Loans
  • Grad PLUS Loans

How much time do I have to pay off my student loans?

This depends on the repayment terms of your loans. Most federal student loans have repayment terms of 10 years with longer terms available for larger balances. Private student loan repayment terms vary by lender but generally are between 10 and 20 years.

In addition, there are different repayment plan options. Standard repayment plans usually require consistent monthly payment amounts, depending on if the loan’s interest rate is fixed or variable, and generally help you pay the least amount of interest over the life of the loan. Graduated repayment plans start with a lower payment amount that gradually increases over time. The graduated plan can be helpful for those just starting in their careers with limited incomes. Remember, however, you will be paying more interest on a graduated repayment plan, so if you need to use this type of plan, any extra payments you can make will help decrease the overall amount you will have to pay over time.

If you’d like to pay off your loans sooner, the good news is, just because your repayment term is for 10 years doesn’t mean it has to take you that long! Budgeting will help you save money in the long run so you can work on paying your loans off sooner.

jars with money saved in them labelled debt, savings and invest

How do I budget for my student loans?

This is exactly the right question to ask! To have the best possible handle on your loans, it’s necessary to budget around your loans. Start with determining your monthly income and subtracting your minimum monthly student loan payment amounts. This will give you a sense of how much money you have left over for other expenses and entertainment. You can use an online monthly budget calculator so you know where your money is going each month.

Making your budget balance may take a few tries. If you come in negative, you’ll have to adjust your expenses or develop a plan for more income. Saving is important, but don’t forget to budget a little bit of money for fun in your life.

Which student loans should I pay off first?

You should always pay your minimum monthly payments on time for every loan. If you have extra money to put toward student loan payments, it’s best to put that extra toward the loans with the highest rates first. Loans with high interest rates will cost you the most money in the long run. If those rates are also variable, you may want to focus on those too as interest rates in general have been rising over the last year and that is impacting variable rates. If you have a mix of private, subsidized and unsubsidized loans, PLUS or Grad PLUS loans, determine which loans have the highest rates or balances and focus extra payments to those first.

How do I save and pay off my student loans? Which should I do first?

If you have money left over after paying your minimum monthly payments, you might want to split it between savings and extra loan payments. Applying additional money above your minimum payment amount will help pay your loans off quicker. While it’s important to pay off loans, especially high interest loans, it is also a good idea to have a safety net for emergencies. Work on building an emergency fund that covers three to six months of expenses.

Also, consider any big events or purchases that are coming up in your life as they may shift your priorities. If you are getting married or want to buy a house, make sure you start to budget for these future expenses.

How do I save money for retirement while paying off student loans?

The best way to save money for retirement is to take advantage of employer-sponsored retirement programs. If your company offers 401(k) with match, you basically earn free money simply by contributing. Most financial experts recommend that you contribute at least as much as your employer will match to maximize money going toward retirement.

Can I buy a house if I have student loans?

Mortgage lenders generally look at your credit score and debt-to-income ratio (DTI) and consider your down payment when determining whether to approve an application, so focus on these areas to make yourself an attractive candidate for lending.

A high DTI can make it harder to obtain a mortgage. One way to lower your debt-to-income ratio while you have student loans is to pay off other types of debt such as high-interest credit cards or car loans.

While you may not be able to purchase your dream home just yet, begin by looking at starter homes that are within your means and start saving for your down payment. You may also want to consider government programs that help first-time home buyers and individuals who want to buy a home but are struggling with student loan debt.

How do I lower my student loan payments?

If you have private student loans, or a mix of federal and private, you may be able to lower your monthly payments by refinancing. While you may need a creditworthy cosigner if you haven’t established much credit, refinancing can be worth it in savings. The federal government also offers a consolidation program for federal student loans only, although it doesn’t typically lower interest rates as the existing rates are instead averaged.

By consolidating your loans and refinancing, you may be eligible for a lower interest rate that can save you thousands of dollars, so you have more money to live your life. To find out if you pre-qualify for refinancing with Iowa Student Loan, complete our simple pre-qualification process!

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By: Iowa Student Loan