SMART FINANCE REPORTS
The Top 8 Tips For Millennials With Student Loans
Nearly 7 million federal-loan borrowers alone are in default on a total of $113.5 billion in student loans. And student loan debt is the second-largest pile of debt in the U.S., trailing only mortgages. Here are eight tips for attacking your student loan debt.

Whittle it down. One way to do that is by paying off the loan that's easiest to settle, if you have more than one. "See which one is your smallest balance," said David Hays, president of Comprehensive Financial Consultants, in Bloomington, Ind. "Pay off that smallest one so you can notch a win and feel like you're making headway." If it would help you pay off that smallest one, consider paying just the minimal required on your other student loans or even seeking a deferral if you're eligible, Hays says.

Do the math. A second way to whittle down your debt is by getting rid of the costliest loan first. Private-lender rates on loans can top 15%, says Nate Matherson, CEO of LendEDU, with government loans costing as much as 7%. "Paying down debt that costs you 7.2% is better than many investments, if you can't earn that much or more on the investment," Matherson added.

It's a question of what the best way is to use your income or assets. It makes more sense to get rid of a, say, 7% loan than continuing to pay the loan while using your money to make an investment that earns only, say, 5%, says Andrei Cherny, CEO of Aspiration, a financial advisory firm that lets customers set their own fees.

If you have loans from both private lenders and the government, odds are that your private loans carry higher interest rates. "Pay those off first," Matherson said.

Can Your Loans Be Dismissed?

Beware of easy-fix myths. A small percentage of student-loan borrowers are eligible to have their loans dismissed. To qualify, you typically must work for a government organization or tax-exempt 501(c)(3) charity. But don't count on this solution.

"Only a very small percentage of people qualify for student-loan forgiveness," Matherson said. "You see many ads, but the vast majority are just scams. We did a study earlier this year and found that about 50% of borrowers think they qualify for forgiveness. It's just not true. It's only in the low single figures."

You can learn more about loan forgiveness at this U.S. Department of Education site.

Concrete Steps

Once you've decided which loan you're going to pay off first, take certain steps to make your payment process easier and less burdensome. These five steps spell out tactics for how to proceed.

Check your workplace benefits. See if your employer offers student-loan repayment benefits. Some do, Matherson says. If this option is available, why not let your employer help you pay back your loans?

Consider setting up an automatic payment program. "Student loan servicers almost always provide a 0.25% discount for auto-pay, which can really add up over the life of a loan," Matherson said. "Plus, by using auto-pay, borrowers don't need to worry about making on-time payments each month." Late payments can hurt your credit score and cost you extra in fees, he says.

Auto-pay has additional benefits. "If you can't see the money, you won't miss it as much," said Doug Amis, president of Cardinal Retirement Planning, in Cary, N.C.

Affordable Repayments

Be realistic. Make sure your repayment fits your budget. "(The) fundamentals need to be there to make sure you can afford your payment before you set up the plan," Amis said. "Mistakes can result in overdraft fees and budget crunches."

Amis recommends starting with a small amount that you know you can afford, then ratcheting it up over time as the maximum you can afford becomes more clear or as your income rises.

Some automatic payment programs work by transferring from your bank account to the loan-service provider's account, like any online bill-payment program.

Keep a tight leash on the process. Amis recommends that you use your own bank or credit union to set up an online bill pay. "I prefer having the money sent from my own bank instead of authorizing a lender to debit my account, and recommend the same (for other people)," he said.

Don't overlook refinancing. "You can use the savings to pay down your loan faster or to pay for other things," said Matherson, whose website is one of many that lists refinancers and their interest rates.

Now that you know more about Student Loan Refinancing, we urge you to consider called The Student Relief Center. They are a phone center which will assist you in seeing if you could reduce your overall student loans.

Student Relief Center
Phone Number: 888-997-2608