Repayment

Repayment Archives

Repayment Archives - Sparrow Nest

<p>The average individual with a Masters in Social Work has around <a href="https://www.socialworkers.org/LinkClick.aspx?fileticket=MAStKYsElMs%3D&amp;portalid=0">$68,000 to $76,000 in student loan debt</a>. 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.</p>


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<h2 id="h-national-programs" class="wp-block-heading"><strong>National Programs</strong></h2>
<p>The following loan forgiveness programs are for <em>federal student loans</em> only.</p>
<p> </p>
<h3 id="h-public-service-loan-forgiveness" class="wp-block-heading"><strong>Public Service Loan Forgiveness</strong></h3>
<p><a href="https://www.sparrowfi.com/blog/what-is-public-service-loan-forgiveness">Public Service Loan Forgiveness (PSLF)</a> 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 <em>and</em> have made 120 qualifying monthly payments to your federal student loans, you may be eligible for PSLF.</p>
<p>You must complete the PSLF <a href="https://studentaid.gov/sites/default/files/public-service-application-for-forgiveness.pdf">application</a> to qualify.</p>

<h3 id="h-national-health-services-corp-loan-repayment-programs" class="wp-block-heading"><strong>National Health Services Corp Loan Repayment Programs</strong></h3>
<p>If you are a licensed clinical social worker, you may qualify for one of the National Health Services Corp’s <em>three</em> loan repayment programs:</p>
<p><strong>National Health Services Corp Loan Repayment Program: </strong>For licensed primary care clinicians who serve at least two years of service at an approved site in a Health Professional Shortage Area.</p>
<p><strong>National Health Services Corp Substance Use Disorder Workforce Loan Repayment Program:</strong> For health professionals who serve in a Health Professional Shortage Area and improve access to Substance Use Disorder.</p>
<p><strong>NHSC Rural Community Loan Repayment Program:</strong> For health providers who work against the opioid epidemic in an approved rural community.</p>


<h3 id="h-perkins-loan-cancellation" class="wp-block-heading"><strong>Perkins Loan Cancellation</strong></h3>
<p>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.</p>


<h3 id="h-income-based-repayment-forgiveness" class="wp-block-heading"><strong>Income-Based Repayment Forgiveness</strong></h3>
<p>Beyond federal student loan forgiveness programs, social workers can also take advantage of income-based repayment forgiveness.</p>
<p>The following <a href="https://www.sparrowfi.com/blog/pros-and-cons-of-an-income-driven-repayment-plan">income-based repayment programs</a> are eligible for loan forgiveness:</p>
<ul>
<li>Pay As You Earn (PAYE)</li>
<li>Revised Pay As You Earn (REPAYE)</li>
<li>Income-Based Repayment (IBR)</li>
<li>Income-Contingent Repayment (ICR)</li>
</ul>
<p>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.</p>


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<p>If you want to skip pre-qualification and apply directly with a lender, you can do so by clicking <b>Apply</b> below.</p>


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<h2 id="h-state-based-programs" class="wp-block-heading"><strong>State-Based Programs</strong></h2>
<p>Each U.S. state offers at least one state-specific student loan forgiveness program, which social workers may be able to take advantage of.</p>
<p>For example, <a href="https://medicine.uky.edu/centers/ruralhealth/state-loan-repayment-program">Kentucky</a> has a 50/50 matching loan repayment program for healthcare providers who serve in underserved and rural areas. In <a href="https://www.hesc.ny.gov/repay-your-loans/repayment-options-assistance/loan-forgiveness-cancellation-and-discharge/nys-licensed-social-worker-loan-forgiveness-program.html">New York</a>, licensed social workers who work in critical human services areas can get up to $26,000 shaved off of their loans.</p>


<h2 id="h-other-ways-to-find-relief" class="wp-block-heading"><strong>Other Ways to Find Relief</strong></h2>
<p>Beyond student loan forgiveness programs, you can find student loan relief through other means, such as student loan refinancing.</p>
<p><a href="https://www.sparrowfi.com/blog/is-refinancing-student-loans-worth-it">Student loan refinancing</a> 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 <a href="https://www.sparrowfi.com/student-loan-refi">student loan refinance rates</a>. In just three minutes, you can compare real and personalized student loan refinancing rates from 17+ lenders – for free – by using the <a href="https://www.app.sparrowfi.com/login/type">Sparrow </a>form</p>
<p>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.</p>
<p>To explore student loan refinancing offers, complete the free Sparrow form.</p>


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The average individual with a Masters in Social Work has around <a href="https://www.socialworkers.org/LinkClick.aspx?fileticket=MAStKYsElMs%3D&amp;portalid=0">$68,000 to $76,000 in student loan debt</a>. 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.

<h2 id="h-national-programs" class="wp-block-heading"><strong>National Programs</strong></h2>
The following loan forgiveness programs are for <em>federal student loans</em> only.

 
<h3 id="h-public-service-loan-forgiveness" class="wp-block-heading"><strong>Public Service Loan Forgiveness</strong></h3>
<a href="https://www.sparrowfi.com/blog/what-is-public-service-loan-forgiveness">Public Service Loan Forgiveness (PSLF)</a> 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 <em>and</em> have made 120 qualifying monthly payments to your federal student loans, you may be eligible for PSLF.

You must complete the PSLF <a href="https://studentaid.gov/sites/default/files/public-service-application-for-forgiveness.pdf">application</a> to qualify.

<h3 id="h-national-health-services-corp-loan-repayment-programs" class="wp-block-heading"><strong>National Health Services Corp Loan Repayment Programs</strong></h3>
If you are a licensed clinical social worker, you may qualify for one of the National Health Services Corp’s <em>three</em> loan repayment programs:

<strong>National Health Services Corp Loan Repayment Program: </strong>For licensed primary care clinicians who serve at least two years of service at an approved site in a Health Professional Shortage Area.

<strong>National Health Services Corp Substance Use Disorder Workforce Loan Repayment Program:</strong> For health professionals who serve in a Health Professional Shortage Area and improve access to Substance Use Disorder.

<strong>NHSC Rural Community Loan Repayment Program:</strong> For health providers who work against the opioid epidemic in an approved rural community.

<h3 id="h-perkins-loan-cancellation" class="wp-block-heading"><strong>Perkins Loan Cancellation</strong></h3>
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.

<h3 id="h-income-based-repayment-forgiveness" class="wp-block-heading"><strong>Income-Based Repayment Forgiveness</strong></h3>
Beyond federal student loan forgiveness programs, social workers can also take advantage of income-based repayment forgiveness.

The following <a href="https://www.sparrowfi.com/blog/pros-and-cons-of-an-income-driven-repayment-plan">income-based repayment programs</a> are eligible for loan forgiveness:
<ul>
 	<li>Pay As You Earn (PAYE)</li>
 	<li>Revised Pay As You Earn (REPAYE)</li>
 	<li>Income-Based Repayment (IBR)</li>
 	<li>Income-Contingent Repayment (ICR)</li>
</ul>
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.

If you want to skip pre-qualification and apply directly with a lender, you can do so by clicking <b>Apply</b> below.

<h2 id="h-state-based-programs" class="wp-block-heading"><strong>State-Based Programs</strong></h2>
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, <a href="https://medicine.uky.edu/centers/ruralhealth/state-loan-repayment-program">Kentucky</a> has a 50/50 matching loan repayment program for healthcare providers who serve in underserved and rural areas. In <a href="https://www.hesc.ny.gov/repay-your-loans/repayment-options-assistance/loan-forgiveness-cancellation-and-discharge/nys-licensed-social-worker-loan-forgiveness-program.html">New York</a>, licensed social workers who work in critical human services areas can get up to $26,000 shaved off of their loans.

<h2 id="h-other-ways-to-find-relief" class="wp-block-heading"><strong>Other Ways to Find Relief</strong></h2>
Beyond student loan forgiveness programs, you can find student loan relief through other means, such as student loan refinancing.

<a href="https://www.sparrowfi.com/blog/is-refinancing-student-loans-worth-it">Student loan refinancing</a> 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 <a href="https://www.sparrowfi.com/student-loan-refi">student loan refinance rates</a>. In just three minutes, you can compare real and personalized student loan refinancing rates from 17+ lenders – for free – by using the <a href="https://www.app.sparrowfi.com/login/type">Sparrow </a>form

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 form.

Public Service Loan Forgiveness (PSLF) is a loan forgiveness program for social workers. Other options include:

Loan Forgiveness for Social Workers - Updated 2024 Guide

Loan Forgiveness for Social Workers &#8211; Updated 2024 Guide

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Abigail Eun

<p>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&#8217;s why it&#8217;s important to know your military spouse student loan forgiveness options.</p>


<h2 id="h-can-military-spouses-get-student-loans-forgiven" class="wp-block-heading"><strong>Can Military Spouses Get Student Loans Forgiven?</strong></h2>
<p>Currently, there are no student loan forgiveness programs designed specifically for military spouses. However, military spouses can still receive loan forgiveness through <em>conventional federal forgiveness programs</em>.</p>


<h2 id="h-other-ways-to-find-student-loan-relief" class="wp-block-heading"><strong>Other Ways to Find Student Loan Relief</strong></h2>
<h3 id="h-public-service-loan-forgiveness" class="wp-block-heading"><strong>Public Service Loan Forgiveness</strong></h3>
<p><a href="https://www.sparrowfi.com/blog/what-is-public-service-loan-forgiveness">Public Service Loan Forgiveness (PSLF)</a> is a student loan forgiveness program for individuals who work in the public sector, such as:</p>
<ul>
<li>Teaches</li>
<li>Doctors</li>
<li>Military Servicemen</li>
<li>Non-profit Employees</li>
<li>Government Workers</li>
</ul>
<p></p>
<p>To determine whether your occupation qualifies as public service, consider using the PSLF <a href="https://studentaid.gov/pslf/" target="_blank" rel="noreferrer noopener">help tool</a>. If you think you qualify, fill out the <a href="https://studentaid.gov/sites/default/files/public-service-application-for-forgiveness.pdf" target="_blank" rel="noreferrer noopener">Public Service Loan Forgiveness &amp; Temporary Expanded PSLF Certification and Application</a>.</p>

<h3 id="h-teacher-and-nurse-loan-forgiveness" class="wp-block-heading"><strong>Teacher and Nurse Loan Forgiveness</strong></h3>
<p>If you’re a teacher or nurse, you have additional options. The following are programs to consider:</p>


<h3 id="h-servicemembers-civil-relief-act" class="wp-block-heading"><strong>Servicemembers Civil Relief Act</strong></h3>
<p>The <a href="https://www.occ.treas.gov/topics/consumers-and-communities/consumer-protection/servicemembers-civil-relief-act/index-servicemembers-civil-relief-act.html#:~:text=The%20Servicemembers'%20Civil%20Relief%20Act,relieve%20stress%20on%20their%20families.&amp;text=The%20SCRA%20covers%20all%20active,Guard%20while%20on%20active%20duty." target="_blank" rel="noreferrer noopener">Servicemembers’ Civil Relief Act</a> allows military spouses to lower the interest rate on their loans to 6%, <em>if </em>the loan was borrowed <em>before the</em> 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.</p>


<h3 id="h-student-loan-refinancing" class="wp-block-heading"><strong>Student Loan Refinancing</strong></h3>
<p><a href="https://www.sparrowfi.com/blog/should-i-refinance-my-student-loans">Student loan refinancing</a> 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.</p>
<p>If you have federal loans that do not qualify for loan forgiveness, you can sometimes <a href="https://www.sparrowfi.com/blog/pros-and-cons-of-an-income-driven-repayment-plan">consolidate them to a qualifying loan type</a>. 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.</p>
<p>Here is a list of some of the <a href="https://www.sparrowfi.com/student-loan-refi">best refinance rates for student loans</a>: Rather than searching for lenders one-by-one, we recommend starting the process with an automated <a href="https://www.sparrowfi.com/student-loan-refi">student loan refinance search</a> tool. After you complete the free <a href="https://www.app.sparrowfi.com/login/type">Sparrow form</a>, we’ll show you the rates and terms you’d pre-qualify for with 17+ premier lenders.</p>


<h3 id="h-income-driven-repayment-forgiveness" class="wp-block-heading"><strong>Income-Driven Repayment Forgiveness</strong></h3>
<p><a href="https://www.sparrowfi.com/blog/pros-and-cons-of-an-income-driven-repayment-plan">Income-driven repayment</a> 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</p>


<h3 id="h-state-sponsored-assistance-programs" class="wp-block-heading"><strong>State-Sponsored Assistance Programs</strong></h3>
<p>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.</p>


<h2 id="h-closing-thoughts-from-the-nest" class="wp-block-heading"><strong>Closing Thoughts From the Nest</strong></h2>
<p>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.</p>


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.

<h2 id="h-closing-thoughts-from-the-nest" class="wp-block-heading"><strong>Closing Thoughts From the Nest</strong></h2>
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.

<h2 id="h-can-military-spouses-get-student-loans-forgiven" class="wp-block-heading"><strong>Can Military Spouses Get Student Loans Forgiven?</strong></h2>
Currently, there are no student loan forgiveness programs designed specifically for military spouses. However, military spouses can still receive loan forgiveness through <em>conventional federal forgiveness programs</em>.

<h2 id="h-other-ways-to-find-student-loan-relief" class="wp-block-heading"><strong>Other Ways to Find Student Loan Relief</strong></h2>
<h3 id="h-public-service-loan-forgiveness" class="wp-block-heading"><strong>Public Service Loan Forgiveness</strong></h3>
<a href="https://www.sparrowfi.com/blog/what-is-public-service-loan-forgiveness">Public Service Loan Forgiveness (PSLF)</a> is a student loan forgiveness program for individuals who work in the public sector, such as:
<ul>
 	<li>Teaches</li>
 	<li>Doctors</li>
 	<li>Military Servicemen</li>
 	<li>Non-profit Employees</li>
 	<li>Government Workers</li>
</ul>


To determine whether your occupation qualifies as public service, consider using the PSLF <a href="https://studentaid.gov/pslf/" target="_blank" rel="noreferrer noopener">help tool</a>. If you think you qualify, fill out the <a href="https://studentaid.gov/sites/default/files/public-service-application-for-forgiveness.pdf" target="_blank" rel="noreferrer noopener">Public Service Loan Forgiveness &amp; Temporary Expanded PSLF Certification and Application</a>.

<h3 id="h-teacher-and-nurse-loan-forgiveness" class="wp-block-heading"><strong>Teacher and Nurse Loan Forgiveness</strong></h3>
If you’re a teacher or nurse, you have additional options. The following are programs to consider:

<strong>Student Loan Forgiveness Program</strong>

<strong>Public Service Loan Forgiveness</strong>

Must have worked in public service and made 10 years’ worth of on-time loan payments on Direct loans.

<strong><a href="https://studentaid.gov/manage-loans/forgiveness-cancellation/perkins">Perkins Loan Cancellation</a></strong>

Must be a full-time nurse or a teacher who works in a designated school.
Must have borrowed a Perkins Loan before 2017.

<strong><a href="https://www.sparrowfi.com/blog/best-teacher-loan-forgiveness-programs">Teacher Loan Forgiveness</a></strong>

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.

<strong><a href="https://www.sparrowfi.com/blog/best-nurse-loan-forgiveness-programs">Nurse Corps Loan Repayment Program</a></strong>

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.

<strong><a href="https://nhsc.hrsa.gov/loan-repayment/nhsc-loan-repayment-program" target="_blank" rel="noreferrer noopener">National Health Service Corps Loan Repayment Program</a></strong>

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.

<h3 id="h-servicemembers-civil-relief-act" class="wp-block-heading"><strong>Servicemembers Civil Relief Act</strong></h3>
The <a href="https://www.occ.treas.gov/topics/consumers-and-communities/consumer-protection/servicemembers-civil-relief-act/index-servicemembers-civil-relief-act.html#:~:text=The%20Servicemembers'%20Civil%20Relief%20Act,relieve%20stress%20on%20their%20families.&amp;text=The%20SCRA%20covers%20all%20active,Guard%20while%20on%20active%20duty." target="_blank" rel="noreferrer noopener">Servicemembers’ Civil Relief Act</a> allows military spouses to lower the interest rate on their loans to 6%, <em>if </em>the loan was borrowed <em>before the</em> 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.

<h3 id="h-student-loan-refinancing" class="wp-block-heading"><strong>Student Loan Refinancing</strong></h3>
<a href="https://www.sparrowfi.com/blog/should-i-refinance-my-student-loans">Student loan refinancing</a> 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 <a href="https://www.sparrowfi.com/blog/pros-and-cons-of-an-income-driven-repayment-plan">consolidate them to a qualifying loan type</a>. 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 <a href="https://www.sparrowfi.com/student-loan-refi">best refinance rates for student loans</a>: Rather than searching for lenders one-by-one, we recommend starting the process with an automated <a href="https://www.sparrowfi.com/student-loan-refi">student loan refinance search</a> tool. After you complete the free <a href="https://www.app.sparrowfi.com/login/type">Sparrow form</a>, we’ll show you the rates and terms you’d pre-qualify for with 17+ premier lenders.

<h3 id="h-income-driven-repayment-forgiveness" class="wp-block-heading"><strong>Income-Driven Repayment Forgiveness</strong></h3>
<a href="https://www.sparrowfi.com/blog/pros-and-cons-of-an-income-driven-repayment-plan">Income-driven repayment</a> 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

<h3 id="h-state-sponsored-assistance-programs" class="wp-block-heading"><strong>State-Sponsored Assistance Programs</strong></h3>
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.

Military spouses can still receive student loan forgiveness through conventional federal forgiveness programs. Learn more about your options:

How to Get Student Loan Forgiveness for Military Spouses

<p>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 <a href="https://studentaid.gov/data-center/student/portfolio">900,000 borrowers</a> who owed $200,000 or more in student loans.</p>
<p>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.</p>


Get started

<h2 id="h-look-for-student-loan-forgiveness-opportunities" class="wp-block-heading"><strong>Look for Student Loan Forgiveness Opportunities</strong></h2>
<p>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 <a href="https://www.sparrowfi.com/blog/the-ultimate-guide-to-student-loan-forgiveness">student loan forgiveness</a> opportunities is key.</p>
<p>If you borrowed <em>federal</em> student loans, you may be eligible for student loan forgiveness. Here’s a few programs that you should explore:</p>


<h3 id="h-public-service-loan-forgiveness" class="wp-block-heading"><strong>Public Service Loan Forgiveness</strong></h3>
<p>The <a href="https://www.sparrowfi.com/blog/what-is-public-service-loan-forgiveness">Public Service Loan Forgiveness</a> 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.</p>
<p>Here are some common professions that qualify for Public Service Loan Forgiveness:</p>
<ul>
<li>Non-profit</li>
<li>Government</li>
<li>Lawyers</li>
<li>AmeriCorps</li>
<li>Peace Corps</li>
<li>Medical field</li>
</ul>


<h3 id="h-loan-forgiveness-through-repayment-plans" class="wp-block-heading"><strong>Loan Forgiveness Through Repayment Plans</strong></h3>
<p>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 <a href="https://www.sparrowfi.com/blog/pros-and-cons-of-an-income-driven-repayment-plan">Income-Based Repayment Plan</a>, 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.</p>


<h3 id="h-occupation-based-loan-forgiveness" class="wp-block-heading"><strong>Occupation-Based Loan Forgiveness</strong></h3>
<p>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<a href="https://www.sparrowfi.com/blog/best-military-student-loan-forgiveness-programs"> student loan forgiveness options</a> you may have.</p>
<p>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, <a href="https://www.sparrowfi.com/blog/best-teacher-loan-forgiveness-programs">Teacher Loan Forgiveness</a>, and Perkins Loan Cancellation.</p>


<h3 id="h-borrower-defense" class="wp-block-heading"><strong>Borrower Defense</strong></h3>
<p>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 <a href="https://studentaid.gov/borrower-defense/">file a claim</a> with the Department of Education with evidence that you were deceived or misled by your school.</p>


<h2 id="h-refinance-to-a-lower-interest-rate" class="wp-block-heading"><strong>Refinance to a Lower Interest Rate</strong></h2>
<p>Before looking into student loan refinancing options, <strong>double-check that you do not have any opportunities for student loan forgiveness. </strong>If you refinance your student loans, you may lose eligibility for loan forgiveness in the future.</p>
<p><a href="https://www.sparrowfi.com/blog/what-is-student-loan-refinancing">Loan refinancing</a> is when you swap out your current loan with a <em>new</em> 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.</p>


<h2 id="h-cut-back-expenses-or-pick-up-a-side-hustle" class="wp-block-heading"><strong>Cut Back Expenses or Pick Up A Side Hustle</strong></h2>
<p>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 <em>and</em> pick up a side hustle, so don’t stress if that is you. Choose the strategy that works best for you.</p>
<p>If you’re hustling hard and looking for creative ideas to cut back on expenses or make more money, consider the following:</p>
<ol>
<li>Do you have any paid subscriptions you forgot about? Try using a software like <a href="https://www.rocketmoney.com/feature/manage-subscriptions" target="_blank" rel="noreferrer noopener">Rocket Money</a> to catch any subscriptions you might be paying for without knowing it.</li>
<li>When was the last time you negotiated your bills? If it’s been more than a year, it’s time to call.</li>
<li>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.</li>
<li>Use <a href="https://www.upside.com/" target="_blank" rel="noreferrer noopener">Upside</a> 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).</li>
</ol>
<p>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.</p>


<h2 id="h-look-at-your-company-s-benefits" class="wp-block-heading"><strong>Look at Your Company’s Benefits</strong></h2>
<p>Believe it or not, some <a href="https://www.sparrowfi.com/blog/top-30-companies-thatll-pay-off-your-student-debt">employers</a> 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.</p>


<h2 id="h-use-the-debt-avalanche-method" class="wp-block-heading"><strong>Use the Debt Avalanche Method</strong></h2>
<p>The debt avalanche is a popular method to tackle student loan debt. When using the debt avalanche method, you:</p>
<ol>
<li>Pay the minimum payment for all of your outstanding debt, and;</li>
<li>Use your remaining money to pay off your debt with the <strong>highest interest rate</strong>.</li>
</ol>
<p>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.</p>
<p>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%.</p>
<p>Using the debt avalanche method, you would pay off the minimum amounts for <em>all </em>of the loans, while directing any extra money to the loan with a 10% interest rate.</p>
<p>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.</p>


<h2 id="h-how-long-will-it-take-to-pay-off" class="wp-block-heading"><strong>How Long Will It Take to Pay Off?</strong></h2>
<p>To calculate how long it would take you to pay off $200k in student loans, you can use a <a href="https://smartasset.com/student-loans/student-loan-calculator">student loan calculator</a>. Student loan calculators allow you to adjust your monthly payment in different scenarios, allowing you to see how long different repayment plans would take.</p>


<h2 id="h-closing-thoughts-from-the-nest" class="wp-block-heading"><strong>Closing Thoughts From the Nest</strong></h2>
<p>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.</p>


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 <a href="https://studentaid.gov/data-center/student/portfolio">900,000 borrowers</a> 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.

<h2 id="h-look-at-your-company-s-benefits" class="wp-block-heading"><strong>Look at Your Company’s Benefits</strong></h2>
Believe it or not, some <a href="https://www.sparrowfi.com/blog/top-30-companies-thatll-pay-off-your-student-debt">employers</a> 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.

<h2 id="h-use-the-debt-avalanche-method" class="wp-block-heading"><strong>Use the Debt Avalanche Method</strong></h2>
The debt avalanche is a popular method to tackle student loan debt. When using the debt avalanche method, you:
<ol>
 	<li>Pay the minimum payment for all of your outstanding debt, and;</li>
 	<li>Use your remaining money to pay off your debt with the <strong>highest interest rate</strong>.</li>
</ol>
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 <em>all </em>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.

<h2 id="h-how-long-will-it-take-to-pay-off" class="wp-block-heading"><strong>How Long Will It Take to Pay Off?</strong></h2>
To calculate how long it would take you to pay off $200k in student loans, you can use a <a href="https://smartasset.com/student-loans/student-loan-calculator">student loan calculator</a>. Student loan calculators allow you to adjust your monthly payment in different scenarios, allowing you to see how long different repayment plans would take.

<h2 id="h-closing-thoughts-from-the-nest" class="wp-block-heading"><strong>Closing Thoughts From the Nest</strong></h2>
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.

<h2 id="h-look-for-student-loan-forgiveness-opportunities" class="wp-block-heading"><strong>Look for Student Loan Forgiveness Opportunities</strong></h2>
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 <a href="https://www.sparrowfi.com/blog/the-ultimate-guide-to-student-loan-forgiveness">student loan forgiveness</a> opportunities is key.

If you borrowed <em>federal</em> student loans, you may be eligible for student loan forgiveness. Here’s a few programs that you should explore:

<h3 id="h-public-service-loan-forgiveness" class="wp-block-heading"><strong>Public Service Loan Forgiveness</strong></h3>
The <a href="https://www.sparrowfi.com/blog/what-is-public-service-loan-forgiveness">Public Service Loan Forgiveness</a> 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:
<ul>
 	<li>Non-profit</li>
 	<li>Government</li>
 	<li>Lawyers</li>
 	<li>AmeriCorps</li>
 	<li>Peace Corps</li>
 	<li>Medical field</li>
</ul>

<h3 id="h-loan-forgiveness-through-repayment-plans" class="wp-block-heading"><strong>Loan Forgiveness Through Repayment Plans</strong></h3>
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 <a href="https://www.sparrowfi.com/blog/pros-and-cons-of-an-income-driven-repayment-plan">Income-Based Repayment Plan</a>, 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.

<h3 id="h-occupation-based-loan-forgiveness" class="wp-block-heading"><strong>Occupation-Based Loan Forgiveness</strong></h3>
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<a href="https://www.sparrowfi.com/blog/best-military-student-loan-forgiveness-programs"> student loan forgiveness options</a> 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, <a href="https://www.sparrowfi.com/blog/best-teacher-loan-forgiveness-programs">Teacher Loan Forgiveness</a>, and Perkins Loan Cancellation.

<h3 id="h-borrower-defense" class="wp-block-heading"><strong>Borrower Defense</strong></h3>
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 <a href="https://studentaid.gov/borrower-defense/">file a claim</a> with the Department of Education with evidence that you were deceived or misled by your school.

<h2 id="h-refinance-to-a-lower-interest-rate" class="wp-block-heading"><strong>Refinance to a Lower Interest Rate</strong></h2>
Before looking into student loan refinancing options, <strong>double-check that you do not have any opportunities for student loan forgiveness. </strong>If you refinance your student loans, you may lose eligibility for loan forgiveness in the future.

<a href="https://www.sparrowfi.com/blog/what-is-student-loan-refinancing">Loan refinancing</a> is when you swap out your current loan with a <em>new</em> 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.

<h2 id="h-cut-back-expenses-or-pick-up-a-side-hustle" class="wp-block-heading"><strong>Cut Back Expenses or Pick Up A Side Hustle</strong></h2>
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 <em>and</em> 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:
<ol>
 	<li>Do you have any paid subscriptions you forgot about? Try using a software like <a href="https://www.rocketmoney.com/feature/manage-subscriptions" target="_blank" rel="noreferrer noopener">Rocket Money</a> to catch any subscriptions you might be paying for without knowing it.</li>
 	<li>When was the last time you negotiated your bills? If it’s been more than a year, it’s time to call.</li>
 	<li>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.</li>
 	<li>Use <a href="https://www.upside.com/" target="_blank" rel="noreferrer noopener">Upside</a> 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).</li>
</ol>
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.

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 &hellip; Continue reading "How to Pay Off $200k in Student Loans Fast"

How to Pay Off $200k in Student Loans Fast

Federal Student Loans

Federal Student Loans Archives

Federal Student Loans Archives - Sparrow Nest

With President Biden’s student loan forgiveness program dominating news headlines as the federal courts debate the legality of his debt relief plan, you may be wondering, “What is student loan forgiveness?” If that’s the case for you, you’re in the right place. Keep reading to learn about what student loan forgiveness is and what programs &hellip; Continue reading "What is Student Loan Forgiveness?"

What is Student Loan Forgiveness?

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


<h2 id="should-i-pay-off-student-loans-early" class="wp-block-heading"><strong>Should I Pay Off Student Loans Early?</strong></h2>
<p>Ask yourself the following questions:</p>
<h3 class="wp-block-heading"><strong>#1: Do you have at least 3-6 months’ worth of emergency funds?</strong></h3>
<p>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.</p>


<h3 class="wp-block-heading"><strong>#2: Are you saving for retirement?</strong></h3>
<p>While retirement may seem far away, <a href="https://www.sparrowfi.com/blog/pay-off-student-loans-or-invest-what-you-should-do">investing</a> in your retirement while young is crucial to having long-term financial security. If your retirement fund is lacking, consider prioritizing it first.</p>
<p>Once you’re in the position to pay off your student loans <em>while</em> still adding to your retirement fund, then you may want to start directing some extra money to your student loan payments.</p>


<h3 class="wp-block-heading"><strong>#3: Have you paid off all high-interest debt?</strong></h3>
<p>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 <a href="https://www.sparrowfi.com/blog/which-student-loans-should-you-pay-off-first">priority to pay off</a> so that the consequences of compound interest do not work against you.</p>


<h3 class="wp-block-heading"><strong>#4: Do you have a “sufficient” income?</strong></h3>
<p>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.</p>


<h2 id="benefits-and-downsides-of-paying-off-student-loans-early" class="wp-block-heading"><strong>Pros and Cons of Paying Off Student Loans Early</strong></h2>
<p>Before making your final decision, carefully weigh the pros and cons.</p>


<h2 id="is-it-worth-it-to-pay-off-student-loans-early" class="wp-block-heading"><strong>Is It Worth It To Pay Off Student Loans Early?</strong></h2>
<p>Yes, it is worth it to pay off your student loans early <em>if</em> 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.</p>
<p>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.</p>


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

<h2 id="should-i-pay-off-student-loans-early" class="wp-block-heading"><strong>Should I Pay Off Student Loans Early?</strong></h2>
Ask yourself the following questions:
<h3 class="wp-block-heading"><strong>#1: Do you have at least 3-6 months’ worth of emergency funds?</strong></h3>
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.

<h3 class="wp-block-heading"><strong>#2: Are you saving for retirement?</strong></h3>
While retirement may seem far away, <a href="https://www.sparrowfi.com/blog/pay-off-student-loans-or-invest-what-you-should-do">investing</a> 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 <em>while</em> still adding to your retirement fund, then you may want to start directing some extra money to your student loan payments.

<h3 class="wp-block-heading"><strong>#3: Have you paid off all high-interest debt?</strong></h3>
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 <a href="https://www.sparrowfi.com/blog/which-student-loans-should-you-pay-off-first">priority to pay off</a> so that the consequences of compound interest do not work against you.

<h3 class="wp-block-heading"><strong>#4: Do you have a “sufficient” income?</strong></h3>
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.

<h2 id="benefits-and-downsides-of-paying-off-student-loans-early" class="wp-block-heading"><strong>Pros and Cons of Paying Off Student Loans Early</strong></h2>
Before making your final decision, carefully weigh the pros and cons.

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.

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.

<h2 id="is-it-worth-it-to-pay-off-student-loans-early" class="wp-block-heading"><strong>Is It Worth It To Pay Off Student Loans Early?</strong></h2>
Yes, it is worth it to pay off your student loans early <em>if</em> 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.

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 &hellip; Continue reading "What are the Benefits of Paying Off Student Loans Early?"

What are the Benefits of Paying Off Student Loans Early?

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 &hellip; Continue reading "Which Student Loans Should You Pay Off First?"

Which Student Loans Should You Pay Off First?

Private Student Loans

Private Student Loans Archives

Private Student Loans Archives - Sparrow Nest

According to the Education Data Initiative, around 15% of student loans are in default at any given time. If you are in student loan default, it’s understandable to feel overwhelmed and discouraged. However, don’t lose hope. There are many ways to financially recover from it.  Jump Ahead > What is Student Loan Default? • What Happens &hellip; Continue reading "Student Loan Default: What It Is and How to Financially Recover"

Student Loan Default: What It Is and How to Financially Recover

Student loan discharge programs are another great way to have your student debt wiped from existence.

Student Loan Discharge: Top Programs and How to Apply

https://wordpress.sparrowfi.com/wp-content/uploads/2022/08/avatar_user_8_1660321886-96x96.jpg

Aaditya Shah

It’s the talk of the nation. The Biden Administration announced that it will be forgiving billions of dollars in student loan debt.&nbsp; While this news is exciting, it’s a little nerve-wracking at the same time. You might wonder if you even qualify for student loan relief based on the requirements. What even are the requirements &hellip; Continue reading "Who is Eligible for Biden’s Student Loan Relief?"

Who is Eligible for Biden’s Student Loan Relief?

https://wordpress.sparrowfi.com/wp-content/uploads/2022/03/avatar_user_3_1646742295-96x96.jpg

Jocelyn Segoviano

<p>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, “<em>Why has my credit score dropped after paying my student loan? Isn’t that a responsible thing to do?” </em>It does sound a bit backwards, huh?</p>
<p>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.</p>


<h2 id="h-how-your-credit-score-is-determined" class="wp-block-heading"><strong>How Your Credit Score is Determined</strong></h2>
<p>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.</p>


<h3 id="h-payment-history-35" class="wp-block-heading"><strong>Payment History (35%)</strong></h3>
<p>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.</p>


<h3 id="h-amounts-owed-30" class="wp-block-heading"><strong>Amounts Owed (30%)</strong></h3>
<p>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.</p>
<p>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.</p>
<p>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.</p>
<p><em>(Note: “Amounts Owed” is often referred to as credit utilization.)</em></p>


<h3 id="h-length-of-credit-history-15" class="wp-block-heading"><strong>Length of Credit History (15%)</strong></h3>
<p>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.</p>


<h3 id="h-credit-mix-10" class="wp-block-heading"><strong>Credit Mix (10%)</strong></h3>
<p>FICO scores also take into account your credit mix, or the variety of credit accounts you have <em>(ie. credit cards, student loans, mortgage loans, retail accounts, etc.).</em> While you don’t <em>need </em>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.</p>
<p>If you <em>do </em>have a mix of credit accounts and manage them effectively, it can give your score a boost.</p>


<h3 id="h-new-credit-10" class="wp-block-heading"><strong>New Credit (10%)</strong></h3>
<p>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.</p>


<h2 id="h-why-your-score-drops-after-paying-off-debt" class="wp-block-heading"><strong>Why Your Score Drops After Paying Off Debt</strong></h2>
<p>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:</p>
<p> </p>
<h3 id="h-it-can-change-your-credit-utilization-ratio" class="wp-block-heading"><strong>It Can Change Your Credit Utilization Ratio</strong></h3>
<p> </p>
<p>Let’s say you have three credit cards, each with a $10,000 limit. They’re set up as follows:</p>
<p>Card A: $5,000 balance<br />
Card B: $6,000 balance<br />
Card C: $1,000 balance</p>
<p>As a result, you’d have a credit utilization ratio of 40% <em>(12,000 total outstanding balance / 30,000 total credit limit)</em>.</p>
<p>Now, let’s say you decide to pay off and close Card C. Your new credit utilization ratio would be 55% <em>(11,000 total outstanding balance / 20,000 total credit limit).</em></p>
<p>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 <em>higher </em>than it was before.</p>
<p>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.</p>

<h3 id="h-it-shortens-the-length-of-credit-history" class="wp-block-heading"><strong>It Shortens the Length of Credit History</strong></h3>
<p>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.</p>
<p>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.</p>
<p>For example, let’s say these are the three lines of credit you currently have:</p>
<p>Student Loan A: Borrowed 15 years ago<br />
Student Loan B: Borrowed 11 years ago<br />
Credit Card: Opened 10 years ago</p>
<p>In this scenario, the average age of your accounts is 12 years <em>(15 + 11 + 10 / 3). </em>If you paid off Student Loan A, the average age of your accounts would <em>decrease </em>to 10.5 years <em>(11 + 10 / 2). </em></p>
<p>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.</p>


<h3 id="h-it-could-change-your-credit-mix" class="wp-block-heading"><strong>It Could Change Your Credit Mix</strong></h3>
<p>If you have both revolving credit <em>(like credit cards)</em> and an installment loan <em>(like a student loan)</em>, paying off your student loans will shift your credit mix. This could negatively impact your FICO score.</p>


<h2 id="h-student-loan-options-for-bad-credit" class="wp-block-heading"><strong>Student Loan Options for Bad Credit</strong></h2>
<p>If your credit score has dropped, you may need to look into <a href="https://www.sparrowfi.com/blog/how-to-get-a-student-loan-with-bad-credit">how and where to get private student loans for bad credit</a>. Rather than searching for lenders one-by-one, we recommend starting the process with an automated <a href="https://www.sparrowfi.com/">student loan search tool</a>. After you complete the free <a href="https://www.sparrowfi.com/sign-up">Sparrow form</a>, we’ll show you the rates and terms you’d pre-qualify for with 17+ premier lenders.</p>
<p><strong>Here is a list of the best student loan options for bad credit: <a href="https://www.sparrowfi.com/blog/best-private-student-loans-for-bad-credit">5 Best Private Student Loans for Bad Credit</a></strong></p>


<h2 id="h-will-biden-s-student-loan-forgiveness-impact-your-credit-score" class="wp-block-heading"><strong>Will Biden’s Student Loan Forgiveness Impact Your Credit Score?</strong></h2>
<p>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&#8217;s important to understand why and how your score may drop so you know what to expect.</p>


<h2 id="h-how-long-it-ll-take-for-your-score-to-recover" class="wp-block-heading"><strong>How Long It’ll Take for Your Score to Recover</strong></h2>
<p>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 <em>(if everything else remains the same). </em></p>
<p>In the meantime, consider other ways to <a href="https://www.sparrowfi.com/blog/5-ways-to-improve-your-credit-score">increase your credit score</a>. Continue to use other lines of credit responsibly, and check on your score periodically to see if it increases as expected.</p>


<h2 id="h-final-thoughts-from-the-nest" class="wp-block-heading"><strong>Final Thoughts from the Nest</strong></h2>
<p>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.</p>
<p>If, after a few months, your score is still the same, consider examining your <a href="https://www.annualcreditreport.com/index.action">full credit report</a> to check for errors that may be preventing your score from recovering.</p>


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, “<em>Why has my credit score dropped after paying my student loan? Isn’t that a responsible thing to do?” </em>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.

<h3 id="h-it-shortens-the-length-of-credit-history" class="wp-block-heading"><strong>It Shortens the Length of Credit History</strong></h3>
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 <em>(15 + 11 + 10 / 3). </em>If you paid off Student Loan A, the average age of your accounts would <em>decrease </em>to 10.5 years <em>(11 + 10 / 2). </em>

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.

<h3 id="h-it-could-change-your-credit-mix" class="wp-block-heading"><strong>It Could Change Your Credit Mix</strong></h3>
If you have both revolving credit <em>(like credit cards)</em> and an installment loan <em>(like a student loan)</em>, paying off your student loans will shift your credit mix. This could negatively impact your FICO score.

<h2 id="h-student-loan-options-for-bad-credit" class="wp-block-heading"><strong>Student Loan Options for Bad Credit</strong></h2>
If your credit score has dropped, you may need to look into <a href="https://www.sparrowfi.com/blog/how-to-get-a-student-loan-with-bad-credit">how and where to get private student loans for bad credit</a>. Rather than searching for lenders one-by-one, we recommend starting the process with an automated <a href="https://www.sparrowfi.com/">student loan search tool</a>. After you complete the free <a href="https://www.sparrowfi.com/sign-up">Sparrow form</a>, we’ll show you the rates and terms you’d pre-qualify for with 17+ premier lenders.

<strong>Here is a list of the best student loan options for bad credit: <a href="https://www.sparrowfi.com/blog/best-private-student-loans-for-bad-credit">5 Best Private Student Loans for Bad Credit</a></strong>

<h2 id="h-will-biden-s-student-loan-forgiveness-impact-your-credit-score" class="wp-block-heading"><strong>Will Biden’s Student Loan Forgiveness Impact Your Credit Score?</strong></h2>
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.

<h2 id="h-how-long-it-ll-take-for-your-score-to-recover" class="wp-block-heading"><strong>How Long It’ll Take for Your Score to Recover</strong></h2>
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 <em>(if everything else remains the same). </em>

In the meantime, consider other ways to <a href="https://www.sparrowfi.com/blog/5-ways-to-improve-your-credit-score">increase your credit score</a>. Continue to use other lines of credit responsibly, and check on your score periodically to see if it increases as expected.

<h2 id="h-final-thoughts-from-the-nest" class="wp-block-heading"><strong>Final Thoughts from the Nest</strong></h2>
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 <a href="https://www.annualcreditreport.com/index.action">full credit report</a> to check for errors that may be preventing your score from recovering.

<h2 id="h-how-your-credit-score-is-determined" class="wp-block-heading"><strong>How Your Credit Score is Determined</strong></h2>
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.

<h3 id="h-payment-history-35" class="wp-block-heading"><strong>Payment History (35%)</strong></h3>
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.

<h3 id="h-amounts-owed-30" class="wp-block-heading"><strong>Amounts Owed (30%)</strong></h3>
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.

<em>(Note: “Amounts Owed” is often referred to as credit utilization.)</em>

<h3 id="h-length-of-credit-history-15" class="wp-block-heading"><strong>Length of Credit History (15%)</strong></h3>
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.

<h3 id="h-credit-mix-10" class="wp-block-heading"><strong>Credit Mix (10%)</strong></h3>
FICO scores also take into account your credit mix, or the variety of credit accounts you have <em>(ie. credit cards, student loans, mortgage loans, retail accounts, etc.).</em> While you don’t <em>need </em>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 <em>do </em>have a mix of credit accounts and manage them effectively, it can give your score a boost.

<h3 id="h-new-credit-10" class="wp-block-heading"><strong>New Credit (10%)</strong></h3>
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.

<h2 id="h-why-your-score-drops-after-paying-off-debt" class="wp-block-heading"><strong>Why Your Score Drops After Paying Off Debt</strong></h2>
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:

 
<h3 id="h-it-can-change-your-credit-utilization-ratio" class="wp-block-heading"><strong>It Can Change Your Credit Utilization Ratio</strong></h3>
 

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% <em>(12,000 total outstanding balance / 30,000 total credit limit)</em>.

Now, let’s say you decide to pay off and close Card C. Your new credit utilization ratio would be 55% <em>(11,000 total outstanding balance / 20,000 total credit limit).</em>

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 <em>higher </em>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.

Paying off your debt can change your credit utilization ratio. Accordingly, your credit score may have dropped after paying your student loan.

Why Did My Credit Score Drop After Paying Off Student Loans?

https://wordpress.sparrowfi.com/wp-content/uploads/2021/08/avatar_user_2_1628701310-96x96.jpg

Grace Lemire

<p>Since 1980, the cost of a college education has <a href="https://www.whitehouse.gov/briefing-room/statements-releases/2022/08/24/fact-sheet-president-biden-announces-student-loan-relief-for-borrowers-who-need-it-most/">nearly tripled</a>, even after adjusting for inflation. Yet, federal aid hasn’t kept up.</p>
<p>So, during his presidential campaign, Joe Biden promised to cancel $10,000 of federal student loan debt per borrower.</p>
<p>In August 2022, Biden announced eligible borrowers would see up to $20,000 in federal student debt erased. By November, federal judges had frozen the proposal. The Supreme Court declared the plan unconstitutional in June 2022.</p>
<p>The good news for federal student loan borrowers is that there are other student loan forgiveness programs you might be eligible for.</p>


<h2 id="h-what-to-do-if-you-don-t-qualify-for-student-loan-forgiveness" class="wp-block-heading"><strong>Other Student Loan Forgiveness Programs</strong></h2>
<p>If you’re still itching for your student debt to be wiped out, or at least a portion of it, we don’t blame you. Consider other student loan forgiveness programs, such as the following:</p>
<h3 id="h-public-service-loan-forgiveness" class="wp-block-heading"><strong>Public Service Loan Forgiveness</strong></h3>
<p><a href="https://www.sparrowfi.com/blog/what-is-public-service-loan-forgiveness">Public Service Loan Forgiveness</a>, or PSLF, is a government program intended to ease the burden of student loan debt for eligible public service workers. To qualify, you’ll need to have made 120 on-time, qualifying monthly payments on a Direct loan, on a qualifying repayment plan, while working for a qualifying employer.</p>
<p>Qualifying roles include, but are not limited to:</p>
<ul>
<li>Teachers, staff members, and administrators at public schools</li>
<li>Law enforcement officers at the federal, state, or local level</li>
<li>Social workers at public service agencies</li>
<li>General employees at federal, state, or local agencies</li>
<li>Military servicemen</li>
<li>Public health professionals such as nurses, doctors, or administrators</li>
<li>Employees at 501(c)(3) organizations</li>
<li>Full-time volunteers at AmeriCorps or PeaceCorps organizations</li>
</ul>
<p>If you <em>do </em>qualify, your remaining loan balance will be forgiven.</p>


<h3 id="h-teacher-loan-forgiveness" class="wp-block-heading"><strong>Teacher Loan Forgiveness</strong></h3>
<p>Teacher Loan Forgiveness is a federal program providing teachers with debt relief. To qualify, you must be a highly-qualified teacher that taught at a low-income school or educational service agency for at least five consecutive school years.</p>
<p>The amount forgiven depends on the subject you teach:</p>
<ul>
<li>Full-time, secondary-level science or math teachers: Up to $17,500</li>
<li>Special education teachers: Up to $17,500</li>
<li>Other subjects: Up to $5,000</li>
</ul>
<h3 id="h-nurse-corps-loan-repayment" class="wp-block-heading"><strong>Nurse Corps Loan Repayment</strong></h3>
<p>Nurses working in critical shortage facilities may be eligible for forgiveness through the Nurse Corps Loan Repayment program. To qualify, you’ll need to:</p>
<ul>
<li>Have attended a qualifying U.S. nursing school</li>
<li>Be either a registered nurse (RN), nurse faculty (NF), or advanced practice registered nurse (APRN)</li>
<li>Work full-time in a critical shortage facility or accredited nursing program</li>
</ul>
<p>If you qualify, up to 85% of your nursing school debt can be forgiven.</p>


<h3 id="h-income-driven-repayment-loan-forgiveness" class="wp-block-heading"><strong>Income-Driven Repayment Loan Forgiveness</strong></h3>
<p>Income-driven repayment (IDR) is a federal loan repayment option that bases your monthly loan payment on your income, rather than basing it on your remaining balance. If you make qualifying payments on an <a href="https://www.sparrowfi.com/blog/pros-and-cons-of-an-income-driven-repayment-plan">IDR plan</a> for 20-25 years, your remaining loan balance can be forgiven.</p>


<h3 id="h-federal-direct-consolidation" class="wp-block-heading"><strong>Federal Direct Consolidation</strong></h3>
<p>If you’re struggling to manage several loan payments at once, <a href="https://www.sparrowfi.com/blog/what-exactly-is-student-loan-consolidation">consolidating</a> may help you.</p>
<p><a href="https://www.sparrowfi.com/blog/what-are-direct-consolidation-loans">Federal Direct Consolidation loans</a> allow you to combine multiple federal loans into one. Then, you’re given a new interest rate equal to the average of your initial interest rates, rounded to the nearest eighth of a percent.</p>
<p>While consolidating won’t save you on interest, it could provide you with access to more repayment options, such as a different repayment plan or a longer repayment period.</p>
<p>In some instances, consolidating may be necessary to qualify for certain forgiveness programs. If you have questions about how consolidating may impact your forgiveness opportunities, contact your loan servicer directly.</p>


<h3 id="h-private-student-loan-refinancing" class="wp-block-heading"><strong>Private Student Loan Refinancing</strong></h3>
<p>If you don’t qualify for student loan forgiveness because you have private student loans, <a href="https://www.sparrowfi.com/blog/what-is-student-loan-refinancing">refinancing</a> to a lower interest rate or a shorter repayment period may be your best bet.</p>
<p>A lower interest rate can reduce your monthly payment, as well as how much you pay over the life of the loan. A shorter repayment period will increase your monthly payment amount, but you’ll save on interest in the long run.</p>
<p>To qualify for a competitive refinance loan, you’ll need a stable income and a decent credit score. To explore your <a href="https://www.sparrowfi.com/blog/best-student-loan-refinancing-companies-in-2022">options for refinancing</a>, complete the <a href="https://www.sparrowfi.com/sign-up">Sparrow form</a>.</p>


<h2 id="h-final-thoughts-from-the-nest" class="wp-block-heading"><strong>Final Thoughts from the Nest</strong></h2>
<p>If you’re confident you don’t qualify for President Biden’s student debt relief, don’t worry — there are other options you may qualify for. Start by verifying your eligibility for other student loan forgiveness programs. Then, decide whether consolidating or refinancing makes sense for you. If you’re unsure which route to take, contact your loan servicer for personalized recommendations.</p>


Since 1980, the cost of a college education has <a href="https://www.whitehouse.gov/briefing-room/statements-releases/2022/08/24/fact-sheet-president-biden-announces-student-loan-relief-for-borrowers-who-need-it-most/">nearly tripled</a>, even after adjusting for inflation. Yet, federal aid hasn’t kept up.

So, during his presidential campaign, Joe Biden promised to cancel $10,000 of federal student loan debt per borrower.

In August 2022, Biden announced eligible borrowers would see up to $20,000 in federal student debt erased. By November, federal judges had frozen the proposal. The Supreme Court declared the plan unconstitutional in June 2022.

The good news for federal student loan borrowers is that there are other student loan forgiveness programs you might be eligible for.

<h2 id="h-what-to-do-if-you-don-t-qualify-for-student-loan-forgiveness" class="wp-block-heading"><strong>Other Student Loan Forgiveness Programs</strong></h2>
If you’re still itching for your student debt to be wiped out, or at least a portion of it, we don’t blame you. Consider other student loan forgiveness programs, such as the following:
<h3 id="h-public-service-loan-forgiveness" class="wp-block-heading"><strong>Public Service Loan Forgiveness</strong></h3>
<a href="https://www.sparrowfi.com/blog/what-is-public-service-loan-forgiveness">Public Service Loan Forgiveness</a>, or PSLF, is a government program intended to ease the burden of student loan debt for eligible public service workers. To qualify, you’ll need to have made 120 on-time, qualifying monthly payments on a Direct loan, on a qualifying repayment plan, while working for a qualifying employer.

Qualifying roles include, but are not limited to:
<ul>
 	<li>Teachers, staff members, and administrators at public schools</li>
 	<li>Law enforcement officers at the federal, state, or local level</li>
 	<li>Social workers at public service agencies</li>
 	<li>General employees at federal, state, or local agencies</li>
 	<li>Military servicemen</li>
 	<li>Public health professionals such as nurses, doctors, or administrators</li>
 	<li>Employees at 501(c)(3) organizations</li>
 	<li>Full-time volunteers at AmeriCorps or PeaceCorps organizations</li>
</ul>
If you <em>do </em>qualify, your remaining loan balance will be forgiven.

<h3 id="h-teacher-loan-forgiveness" class="wp-block-heading"><strong>Teacher Loan Forgiveness</strong></h3>
Teacher Loan Forgiveness is a federal program providing teachers with debt relief. To qualify, you must be a highly-qualified teacher that taught at a low-income school or educational service agency for at least five consecutive school years.

The amount forgiven depends on the subject you teach:
<ul>
 	<li>Full-time, secondary-level science or math teachers: Up to $17,500</li>
 	<li>Special education teachers: Up to $17,500</li>
 	<li>Other subjects: Up to $5,000</li>
</ul>
<h3 id="h-nurse-corps-loan-repayment" class="wp-block-heading"><strong>Nurse Corps Loan Repayment</strong></h3>
Nurses working in critical shortage facilities may be eligible for forgiveness through the Nurse Corps Loan Repayment program. To qualify, you’ll need to:
<ul>
 	<li>Have attended a qualifying U.S. nursing school</li>
 	<li>Be either a registered nurse (RN), nurse faculty (NF), or advanced practice registered nurse (APRN)</li>
 	<li>Work full-time in a critical shortage facility or accredited nursing program</li>
</ul>
If you qualify, up to 85% of your nursing school debt can be forgiven.

<h3 id="h-income-driven-repayment-loan-forgiveness" class="wp-block-heading"><strong>Income-Driven Repayment Loan Forgiveness</strong></h3>
Income-driven repayment (IDR) is a federal loan repayment option that bases your monthly loan payment on your income, rather than basing it on your remaining balance. If you make qualifying payments on an <a href="https://www.sparrowfi.com/blog/pros-and-cons-of-an-income-driven-repayment-plan">IDR plan</a> for 20-25 years, your remaining loan balance can be forgiven.

<h3 id="h-federal-direct-consolidation" class="wp-block-heading"><strong>Federal Direct Consolidation</strong></h3>
If you’re struggling to manage several loan payments at once, <a href="https://www.sparrowfi.com/blog/what-exactly-is-student-loan-consolidation">consolidating</a> may help you.

<a href="https://www.sparrowfi.com/blog/what-are-direct-consolidation-loans">Federal Direct Consolidation loans</a> allow you to combine multiple federal loans into one. Then, you’re given a new interest rate equal to the average of your initial interest rates, rounded to the nearest eighth of a percent.

While consolidating won’t save you on interest, it could provide you with access to more repayment options, such as a different repayment plan or a longer repayment period.

In some instances, consolidating may be necessary to qualify for certain forgiveness programs. If you have questions about how consolidating may impact your forgiveness opportunities, contact your loan servicer directly.

<h3 id="h-private-student-loan-refinancing" class="wp-block-heading"><strong>Private Student Loan Refinancing</strong></h3>
If you don’t qualify for student loan forgiveness because you have private student loans, <a href="https://www.sparrowfi.com/blog/what-is-student-loan-refinancing">refinancing</a> to a lower interest rate or a shorter repayment period may be your best bet.

A lower interest rate can reduce your monthly payment, as well as how much you pay over the life of the loan. A shorter repayment period will increase your monthly payment amount, but you’ll save on interest in the long run.

To qualify for a competitive refinance loan, you’ll need a stable income and a decent credit score. To explore your <a href="https://www.sparrowfi.com/blog/best-student-loan-refinancing-companies-in-2022">options for refinancing</a>, complete the <a href="https://www.sparrowfi.com/sign-up">Sparrow form</a>.

<h2 id="h-final-thoughts-from-the-nest" class="wp-block-heading"><strong>Final Thoughts from the Nest</strong></h2>
If you’re confident you don’t qualify for President Biden’s student debt relief, don’t worry — there are other options you may qualify for. Start by verifying your eligibility for other student loan forgiveness programs. Then, decide whether consolidating or refinancing makes sense for you. If you’re unsure which route to take, contact your loan servicer for personalized recommendations.

Since 1980, the cost of a college education has nearly tripled, even after adjusting for inflation. Yet, federal aid hasn’t kept up. So, during his presidential campaign, Joe Biden promised to cancel $10,000 of federal student loan debt per borrower. In August, he followed through with his promise, announcing up to $20,000 in forgiveness for &hellip; Continue reading "What to Do if You Don’t Qualify for Biden’s Debt Relief"

What to Do if You Don’t Qualify for Biden’s Debt Relief

Student Loan Refinancing

Student Loan Refinancing Archives

Student Loan Refinancing Archives - Sparrow Nest

<p>Managing many student loan payments at once can be very difficult. That’s why student loan consolidation sounds so enticing. You can streamline your payments into one and make it easier on yourself. It sounds like the perfect solution. However, it&#8217;s essential to think about student loan consolidation pros and cons.</p>
<p>Before you start the application process, you should learn about the pros and cons of student loan consolidation so you can make the best decision possible. Lucky for you, this article is your guide to all things consolidation. Let’s get into it.</p>


<h2 id="h-what-is-student-loan-consolidation" class="wp-block-heading"><strong>What is Student Loan Consolidation? </strong></h2>
<p>Student loan consolidation is the process of combining all your federal student loans into one. This is done through a <a href="https://www.sparrowfi.com/blog/what-are-direct-consolidation-loans">Direct Consolidation Loan</a> that you’ll apply for. A Direct Consolidation Loan is a form of <a href="https://www.sparrowfi.com/blog/types-of-student-loans-which-one-is-right-for-me">Direct Loan</a> offered by the government.</p>
<p>If you noticed that this sounds similar to <a href="https://www.sparrowfi.com/blog/should-i-refinance-my-student-loans">student loan refinancing</a>, you wouldn&#8217;t be the only one. Many people see consolidation and refinancing as the same thing. The reality, though, is that they’re pretty different. Here are a few differences.</p>
<ol>
<li>You can only consolidate federal student loans. Meanwhile, you can refinance both federal and private student loans.</li>
<li>While an advantage of refinancing is the possibility of a lower interest rate, you probably won’t <a href="https://www.sparrowfi.com/blog/what-exactly-is-student-loan-consolidation">get that with consolidation</a>. When you consolidate your loans, they will average all of your loan interest rates together and then round up to the nearest ⅛ percentage. This means it will most likely stay the same or go up.</li>
<li>When you consolidate, you’ll retain access to all of your federal benefits. Some loans, like the Federal Perkins Loans, need to be consolidated to access those benefits. Meanwhile, refinancing your federal loans would cause you to lose them.</li>
</ol>


<h2><strong>Pros and Cons of Consolidating Student Loans</strong></h2>


<h2 id="h-faq-about-consolidating-student-loans" class="wp-block-heading"><strong>Consolidating Student Loans FAQs</strong></h2>
<p> </p>
<h3 id="h-will-consolidating-my-student-loans-hurt-my-credit" class="wp-block-heading"><strong>Will consolidating my student loans hurt my credit?</strong></h3>
<p>No, Direct Consolidation Loans don’t have any kind of <a href="https://www.sparrowfi.com/blog/what-credit-score-is-needed-for-a-student-loan">credit score requirement</a> or even do a credit check. So, you don’t have to worry about anything popping up on your credit report. Your score will remain the same.</p>
<p>If you opt to refinance and consolidate privately, you will need to <a href="https://www.sparrowfi.com/blog/whats-a-soft-credit-inquiry-whats-a-hard-credit-inquiry">pass a credit check</a> to qualify. This may temporarily hurt your credit score.</p>

<h3 id="h-does-consolidating-student-loans-lower-your-interest-rate" class="wp-block-heading"><strong>Does consolidating student loans lower your interest rate?</strong></h3>
<p>No, it does not. Your interest rate will most likely stay the same or go up. When determining your interest rate, the government takes the weighted average of all your loans’ interest rates and rounds it up.</p>
<p>Student loan consolidation and refinancing <a href="https://www.sparrowfi.com/student-loan-refi">through a private lender</a>,  however, will likely get you a lower interest rate.</p>


<h3 id="h-is-it-better-to-consolidate-or-refinance-student-loans" class="wp-block-heading"><strong>Is it better to consolidate or refinance student loans?</strong></h3>
<p>It depends on your situation since each has its pros and cons. Consolidating helps you better manage your debt, but you could end up spending more money. Refinancing can help you save a lot of money and manage your debt, but you would lose federal benefits. It’s really up to you and what your priorities are.</p>
<p>To help you make the decision, here&#8217;s a list of the top 4 refinance rates. Rather than searching for lenders one-by-one, we recommend starting the process with an automated <a href="https://www.sparrowfi.com/">student loan search tool</a>. After you complete the free <a href="https://www.sparrowfi.com/sign-up">Sparrow form</a>, we’ll show you the rates and terms you’d pre-qualify for with 17+ premier lenders.</p>


<p></p>
<h2 id="h-final-thoughts-from-the-nest" class="wp-block-heading"><strong>Final Thoughts from the Nest </strong></h2>
<p> </p>
<p>It&#8217;s a big decision to make, and student loan consolidation has its pros and cons. Be sure to take the time to think about it and figure out what’s best for you. That way, no matter what happens, at least you know you made the most well-informed decision.</p>
<p> </p>
<p>If you choose to take a different route instead, like refinancing, use Sparrow to help you <a href="https://www.sparrowfi.com/student-loan-refi">compare refinance rates across multiple lenders</a>. The Sparrow application will match you with what you best pre-qualify for from our partnering lenders. A lot of them offer great refinancing options. Plus, you’ll be able to refinance your federal and private loans together. To get started, fill out the <a href="https://www.app.sparrowfi.com/login/type">Sparrow form</a>.</p>
<p></p>

Managing many student loan payments at once can be very difficult. That’s why student loan consolidation sounds so enticing. You can streamline your payments into one and make it easier on yourself. It sounds like the perfect solution. However, it's essential to think about student loan consolidation pros and cons.

Before you start the application process, you should learn about the pros and cons of student loan consolidation so you can make the best decision possible. Lucky for you, this article is your guide to all things consolidation. Let’s get into it.

<h2 id="h-final-thoughts-from-the-nest" class="wp-block-heading"><strong>Final Thoughts from the Nest </strong></h2>
 

It's a big decision to make, and student loan consolidation has its pros and cons. Be sure to take the time to think about it and figure out what’s best for you. That way, no matter what happens, at least you know you made the most well-informed decision.

 

If you choose to take a different route instead, like refinancing, use Sparrow to help you <a href="https://www.sparrowfi.com/student-loan-refi">compare refinance rates across multiple lenders</a>. The Sparrow application will match you with what you best pre-qualify for from our partnering lenders. A lot of them offer great refinancing options. Plus, you’ll be able to refinance your federal and private loans together. To get started, fill out the <a href="https://www.app.sparrowfi.com/login/type">Sparrow form</a>.

<h2 id="h-what-is-student-loan-consolidation" class="wp-block-heading"><strong>What is Student Loan Consolidation? </strong></h2>
Student loan consolidation is the process of combining all your federal student loans into one. This is done through a <a href="https://www.sparrowfi.com/blog/what-are-direct-consolidation-loans">Direct Consolidation Loan</a> that you’ll apply for. A Direct Consolidation Loan is a form of <a href="https://www.sparrowfi.com/blog/types-of-student-loans-which-one-is-right-for-me">Direct Loan</a> offered by the government.

If you noticed that this sounds similar to <a href="https://www.sparrowfi.com/blog/should-i-refinance-my-student-loans">student loan refinancing</a>, you wouldn't be the only one. Many people see consolidation and refinancing as the same thing. The reality, though, is that they’re pretty different. Here are a few differences.
<ol>
 	<li>You can only consolidate federal student loans. Meanwhile, you can refinance both federal and private student loans.</li>
 	<li>While an advantage of refinancing is the possibility of a lower interest rate, you probably won’t <a href="https://www.sparrowfi.com/blog/what-exactly-is-student-loan-consolidation">get that with consolidation</a>. When you consolidate your loans, they will average all of your loan interest rates together and then round up to the nearest ⅛ percentage. This means it will most likely stay the same or go up.</li>
 	<li>When you consolidate, you’ll retain access to all of your federal benefits. Some loans, like the Federal Perkins Loans, need to be consolidated to access those benefits. Meanwhile, refinancing your federal loans would cause you to lose them.</li>
</ol>

<h2><strong>Pros and Cons of Consolidating Student Loans</strong></h2>

You Could End Up Paying More

Unlike refinancing, you most likely won’t get an interest rate reduction through student loan consolidation. Your interest rate will either stay the same or go up. If you do get a higher interest rate, it would add to the overall cost of the loan and raise your monthly payments. So, you might have to pay more if you consolidate.

If You Consolidate Privately, You’ll Lose Federal Loan Benefits

When you consolidate privately, you will lose your federal benefits. This includes benefits like income-based repayment plans and loan forgiveness. So, you’ll want to think seriously about whether you’ll need these benefits or not. If you think you will, don’t consolidate privately.

You Could Pay More in Interest

As stated, when you consolidate, you could get a longer loan term. Although a longer term can be great, it does mean that you will pay more in the long run. Why? Because there will be more time for interest to build, and that interest will add to the overall cost. 

For example, say you have a $30,000 loan with a 5% interest rate on a standard repayment plan of 10 years. Over those 10 years, you’ll pay an extra $8,184 in interest for a total of $38,184. If your loan term got extended to 20 years, then you’ll pay an extra $17,517 in interest for a total of $47,517.

Simplifies Managing Your Debt

One advantage of student loan consolidation is it simplifies your debt payment. If you have multiple student loans, you understand how hard it can be to pay each one on time. By consolidating, you’ll only have one student loan instead of several. That way, you only worry about making a single payment per month.

Can Extend Your Repayment Term

When you consolidate, there is the possibility of getting an extended repayment plan. This extended plan can provide you the extra needed time to be able to pay off the loan. Plus, with an extended repayment, usually comes a lower monthly payment.

Can Lower Your Monthly Payment

As we mentioned, you might be able to lower your monthly payment when you consolidate. Typically, this will only happen if you get a longer loan term. This is because you’ll have more time to pay off the same amount of money, so you’ll pay less monthly. 

For example, paying a $100 loan off in two months means making $50 monthly payments. If you extend the loan term to five months, then you’ll only pay $20 monthly. It’s the same concept with getting a longer loan term.

<h2 id="h-faq-about-consolidating-student-loans" class="wp-block-heading"><strong>Consolidating Student Loans FAQs</strong></h2>
 
<h3 id="h-will-consolidating-my-student-loans-hurt-my-credit" class="wp-block-heading"><strong>Will consolidating my student loans hurt my credit?</strong></h3>
No, Direct Consolidation Loans don’t have any kind of <a href="https://www.sparrowfi.com/blog/what-credit-score-is-needed-for-a-student-loan">credit score requirement</a> or even do a credit check. So, you don’t have to worry about anything popping up on your credit report. Your score will remain the same.

If you opt to refinance and consolidate privately, you will need to <a href="https://www.sparrowfi.com/blog/whats-a-soft-credit-inquiry-whats-a-hard-credit-inquiry">pass a credit check</a> to qualify. This may temporarily hurt your credit score.

<h3 id="h-does-consolidating-student-loans-lower-your-interest-rate" class="wp-block-heading"><strong>Does consolidating student loans lower your interest rate?</strong></h3>
No, it does not. Your interest rate will most likely stay the same or go up. When determining your interest rate, the government takes the weighted average of all your loans’ interest rates and rounds it up.

Student loan consolidation and refinancing <a href="https://www.sparrowfi.com/student-loan-refi">through a private lender</a>,  however, will likely get you a lower interest rate.

<h3 id="h-is-it-better-to-consolidate-or-refinance-student-loans" class="wp-block-heading"><strong>Is it better to consolidate or refinance student loans?</strong></h3>
It depends on your situation since each has its pros and cons. Consolidating helps you better manage your debt, but you could end up spending more money. Refinancing can help you save a lot of money and manage your debt, but you would lose federal benefits. It’s really up to you and what your priorities are.

To help you make the decision, here's a list of the top 4 refinance rates. Rather than searching for lenders one-by-one, we recommend starting the process with an automated <a href="https://www.sparrowfi.com/">student loan search tool</a>. After you complete the free <a href="https://www.sparrowfi.com/sign-up">Sparrow form</a>, we’ll show you the rates and terms you’d pre-qualify for with 17+ premier lenders.

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