We know there's a lot of information to take in when it comes to your student loans.
Follow the Wizard to Find Ways to Reduce Your Debt!
- Practice smart borrowing
- Understand interest and capitalization
- Save money by making payments while you're in school
- Use Auto Pay and save money
- Pay more than your scheduled monthly payment
- Stay connected to help reduce what you owe
Practice Smart Borrowing
The best ways to limit what you owe are to understand how much you need to borrow and to know how much you're borrowing. Here are ways you can easily estimate costs and track your student loan debt to save you some coins:
- The U.S. Department of Education can help you understand college costs and explore options for lowering them. The exit counseling tool can help you plan your school expenses for the year and estimate your projected student loan balance against your future monthly income.
- Great Lakes' budget calculator can help you manage your budget while you're in school and once you graduate. Setting a budget will help you keep track of your income and expenses to make sure you're not borrowing more than you can afford.
- StudentAid.gov receives information from all of the servicers to provide you with a full picture of all of your federal student loans, not just those serviced by Great Lakes. If you have private loans, you can usually find your lender or servicer on your credit report.
- The U.S. Department of Education's payment calculator can estimate what your monthly payment amount might be for the student loan debt that you currently have and any additional debt that you expect to borrow. Use it to help you estimate what your monthly payment might be after you leave school.
If you know what you owe as you go—and how much your future loan payments may be—you're more likely to borrow just what you need, rather than the maximum amount you can. Good borrowing decisions today mean less debt and an easier payment tomorrow.
Animation transcript: A wizard borrows only the amount of money he needs from a treasure chest to buy a scroll of knowledge.
Understand Interest to Avoid Capitalization
Interest and capitalization make the amount of money you borrow bigger. Understanding how this works is important.
Interest is the cost of borrowing money. It begins to build up (accrue) as soon as you get your loan funds. The amount of interest you pay depends on many factors.
- The amount of money you borrow (principal)—the more you borrow, the more interest you'll pay.
- The rate at which interest is charged (interest rate)—the lower your interest rate, the less interest you'll pay.
- The length of time it takes you to repay the loan—the sooner you repay your loan, the less interest you'll pay.
Whether or not the government helps pay the interest depends on whether your loan is subsidized or unsubsidized.
The interest rate on your private student loans is set by your lender; while the interest rate on your federal student loans is set by Congress as part of the Higher Education Act. You can learn more about interest rates and fees from Federal Student Aid.
What Is Capitalization?
Capitalization is when unpaid interest is added to your loan principal. This can happen at specific times during the life of your loan, such as when your loan enters repayment for the first time, or after a deferment or forbearance period ends. When you're in school at least half-time or you're in your grace period (the six months after you leave school full time) you usually don't have to make payments on your loan. Before your first payment is due, any unpaid interest that has built up is added to the amount you borrowed (capitalized). From that point on, interest accrues on the higher balance so you end up paying interest on interest. On federal student loans, capitalization occurs only when it's required by Department of Education regulations.
Note: If your federal student loans are currently in the COVID-19 forbearance (payment pause), when the pause ends, interest will not capitalize. However, if your loans were in a deferment or forbearance status before March 13, 2020 (when the COVID-19 payment pause began), your outstanding interest may capitalize after December 31, 2022 (when the pause is scheduled to end). It depends on your individual situation. Please call us so we can look at your specific circumstances.
Animation transcript: A principal creature eats the accruing interest, turning it into capitalized interest, which makes the principal grow bigger.
Can I Avoid Capitalization?
One way to avoid capitalization on your unsubsidized loans is to make payments on your interest before regular loan payments are required. Although not everyone is able to afford it, making interest-only payments before you begin making your scheduled monthly payment can limit the negative effects of capitalization. You can zap your interest by paying it off as it accrues, then there's nothing left to capitalize when payment time comes.
Animation transcript: The wizard zaps the accruing interest before it can be turned into capitalized interest, which keeps the principal from growing. The wizard celebrates!
Make Payments While You're in School
Another way to hold down your costs is to make student loan payments while you're still in school. If you can afford it, making payments can reduce what you owe in the long run. It not only reduces your principal, but it also reduces the amount of interest that accrues on your unsubsidized loans and eventually capitalizes. How your payments are applied depends on a number of factors, but in most cases, payments are applied first to any accrued interest and fees, then to your principal balance. Learn how your payments are applied to your loans while you're still in school.
Animation transcript: The wizard runs across the page zapping loan payments.
Use Auto Pay and Save
Auto Pay automatically withdraws your student loan payment from your checking or savings account on a specific date, and can help you save in a few different ways.
First, you can sign up for Auto Pay while you're still in school, which will help you get a head start on your payments and save money in the long run.
Once you enter repayment, you can receive an interest rate reduction of 0.25% on your federal Direct loan while you're making payments using Auto Pay. You may qualify for a benefit from your other lenders as well, so be sure to check with them. This reduces the total amount that you pay over time. Finally, signing up for Auto Pay also means you won't miss any payments!
Pay More than Your Scheduled Monthly Payment
When you're paying off your student loan, every little bit helps. If you can, pay more than your scheduled monthly payment when you're in repayment. The more money you're able to put toward your principal, the faster you'll pay off your loan—and the less you'll pay in the end.
Infographic transcript: If the wizard gets past the monthly payment and is able to make an additional payment, he gets to save the money in his treasure chest.
Stay Connected to Help Reduce What You Owe
Sign up for account access on mygreatlakes.org to stay informed and potentially save you money. Our website is a great place to:
- Understand all of your repayment options.
- Find your 1098-E student loan interest statement.
- Locate the free services we provide.
- Understand servicemember benefits.
Three other important ways to stay connected are to:
Loan type matters
Simply, if your loans aren't “held by the Department of Education” through a federal lender – Nelnet, Great Lakes, and FedLoan are among the most common (you can see a full list here) – you don't qualify for this forgiveness.
- Enroll at a community college.
- Consider attending a no-loan school.
- Estimate college costs.
- Maximize other funding sources.
- Start a side hustle or get a part-time job.
- Limit living expenses.
- Borrow only the amount needed.
- Understand the payments.
- Exhaust Free Sources of Money. ...
- Save as Much as Possible Before College. ...
- Enroll at a Less Expensive School. ...
- Use a Tuition Payment Plan. ...
- Work While In School. ...
- Pay Interest During School. ...
- Pay Interest During Grace Periods.
Pay More than Your Minimum Payment
Paying a little extra each month can reduce the interest you pay and reduce your total cost of your loan over time. Continue to make monthly payments even if you've satisfied future payments, and you'll pay off your loan faster.
Public Service Loan Forgiveness (PSLF)
The PSLF Program forgives the remaining balance on your Direct Loans* after you have made 120 qualifying monthly payments under a qualifying repayment plan while working full-time for a qualifying employer.
Great Lakes is one of the companies named in a class-action lawsuit. The suit alleges that Great Lakes mishandled CARES pandemic relief efforts by illegally providing inaccurate information to the major credit bureaus, damaging student loan borrowers' credit reports.How do I pay off 20000 in student loans? ›
- Start with a budget. ...
- Find one and done ways to save. ...
- Put a chunk towards the loans on payday. ...
- Find extra spare change to put towards your loan throughout the month. ...
- Start a side gig that goes straight to your loan. ...
- Sell some stuff. ...
- Keep track of your progress.
- Develop a budget to track your expenses. ...
- Don't take on more debt. ...
- Pay your bills in full and on time. ...
- Check your bills carefully. ...
- Pay off your high-interest debts first. ...
- Reduce the number of credit cards you have. ...
- Look for the best interest rates when consolidating your debts.
There are two basic strategies that can help you reduce debt: the highest interest rate method and the snowball method.How can I reduce my loan repayment? ›
- Repay loans with savings.
- Repaying your loan early.
- Switching to a low-interest loan or shorter deal.
- Should you consolidate your debts?
- Paying off loans with credit cards.
- Paying off your loan early with extra payments.
To be eligible for forgiveness, you must have federal student loans and earn less than $125,000 annually (or $250,000 per household). Borrowers who meet that criteria can get up to $10,000 in debt cancellation. If you also received a Pell Grant during your education, you can qualify for up to $20,000 in forgiveness.How can students reduce costs? ›
- Utilize Student Resources to Reduce Expenses. ...
- Be “Book Smart” ...
- Apply for Student Scholarships. ...
- Consider Alternative Transportation. ...
- Coupons and Cashback Apps. ...
- Free Activities/Entertainment. ...
- Test out of General Courses.
- Refinance your student loans.
- Add a cosigner with good credit.
- Pay off the loan with the highest interest rate first.
- See if you're eligible for an income-driven repayment plan.
- See if you're eligible for student loan forgiveness.
- Increase your income.
How do I know if I am eligible for debt relief? To be eligible, your annual income must have fallen below $125,000 (for individuals) or $250,000 (for married couples or heads of households). If you received a Pell Grant in college and meet the income threshold, you will be eligible for up to $20,000 in debt relief.Does FSA hurt your credit? ›
Does your FSA card impact your credit? “While FSA cards look and behave like credit or debit cards where they're accepted,” says credit scoring expert Barry Paperno, “like debit cards, they don't appear on your credit report or get included in your credit scores.What companies took Great Lakes student loans? ›
The transfer of loans from Great Lakes to Nelnet will begin in March 2022. Borrowers will be notified at least two weeks before their loan(s) is transferred.Can student loans be removed after 7 years? ›
Do student loans go away after 7 years? Student loans don't go away after seven years. There is no program for loan forgiveness or cancellation after seven years. But if you recently checked your credit report and are wondering, “why did my student loans disappear?” The answer is that you have defaulted student loans.Can I refinance Great Lakes? ›
Did you know that it's possible to get a lower interest rate on your Great Lakes student loan? It totally is. The only catch: You'll have to say "so long" to Great Lakes. To refinance your Great Lakes student loan to a lower interest rate, you'll need to apply for refinancing through a private lender.Do banks forgive student loans? ›
There is no standard forgiveness program for private student loans. However, some states offer private student loan forgiveness for people working in an in-demand field in a high-need area. Lawyers, doctors, dentists, nurses, and veterinarians could qualify for state repayment assistance programs.Why is student loan forgiveness unfair? ›
One holds that forgiveness is unfair to those who borrowed but paid off their debts — an argument that could be raised against any social program on behalf of those who were born too early to benefit from it.
Even though hundreds of thousands of Navient borrowers will receive loan forgiveness, millions still won't.How much is the payment on a 60000 student loan? ›
The monthly payment on a $60,000 student loan ranges from $636 to $5,387, depending on the APR and how long the loan lasts. For example, if you take out a $60,000 student loan and pay it back in 10 years at an APR of 5%, your monthly payment will be $636.Is 50k in student loans a lot? ›
Is $50,000 in student loan debt a lot? The resounding answer is yes, $50,000 is a lot of student loan debt. But when you consider the cost to attend college and that most students take four to five years to graduate, that figure isn't a surprise.Is $25000 in student loans too much? ›
While no one wants to pay student loans, $25,000 in education debt is manageable for the average professional earning $30,000 to $40,000. Depending on a student's eligibility, most (if not all) of this debt would be in government loans. Based on a 20-year term, installments would be around $150 per month.What are the 3 biggest strategies for paying down debt? ›
In general, there are three debt repayment strategies that can help people pay down or pay off debt more efficiently. Pay the smallest debt as fast as possible. Pay minimums on all other debt. Then pay that extra toward the next largest debt.What are 5 ways to avoid debt? ›
- Set a monthly budget. Divide your monthly budget between three categories – necessities, wants, and pending debt.
- Pay with cash. ...
- Avoid “buy now, pay later deals” ...
- Track credit card payments. ...
- Have emergency savings. ...
- Stay up to date on loan payments. ...
- Limit amount of credit cards.
- List Everything You Owe.
- Decide How Much You Can Pay Each Month.
- Reduce Your Interest Rates.
- Pay Your Bills on Time Each Month.
- Be Diligent Moving Forward.
- Pay more than the minimum payment. Go through your budget and decide how much extra you can put toward your debt. ...
- Try the debt snowball. ...
- Refinance debt. ...
- Commit windfalls to debt. ...
- Settle for less than you owe. ...
- Re-examine your budget.
With the debt avalanche method, you order your debts by interest rate, with the highest interest rate first. You pay minimum payments on everything while attacking the debt with the highest interest rate. Once that debt is paid off, you'll move to the one with the next-highest interest rate . . .What is the most basic step in debt reduction? ›
Assess Your Financial Situation and Organize Debt
The first thing you should do to reduce your debt is to assess your financial situation and put all your debts in writing. Most of us tend to guesstimate the amount of debt owing and how much we earn each month, which can cause us to live – and spend – beyond our means.
An IVA is a part of a government scheme to clear debt. It's a formal alternative that is used to avoid bankruptcy and can result in your debts being written off.At what age is student loans forgiven? ›
Revised Pay As You Earn (REPAYE) works much the same way as Pay As You Earn. Under this plan, your payments will be capped at 10% of your discretionary income. Undergraduate loans are forgiven after 20 years, while graduate school loans are forgiven after 25 years.Is it true that student loans are forgiven after 25 years? ›
Any outstanding balance on your loan will be forgiven if you haven't repaid your loan in full after 20 years or 25 years, depending on when you received your first loans. You may have to pay income tax on any amount that is forgiven.Will my credit score go up if my student loans are forgiven? ›
Your credit score might rise. For some people, student loan forgiveness could actually lead to a higher credit score. That's because eliminating up to $20,000 in debt could constitute a major decrease in your total debt balance, which accounts for 30% of your FICO score.What 4 ideas are given for reducing college costs? ›
- Don't rule-out financial aid. ...
- Research alternative housing and transportation. ...
- Consider a work-study program. ...
- Start with two years of community college. ...
- Earn college credits in high school. ...
- Begin saving early. ...
- Make education part of your long-term financial plan.
- Make a plan. You need to evaluate where your business is now and where you want to take it in the future. ...
- Track expenses diligently. ...
- Benchmark against your industry. ...
- Manage variable costs. ...
- Get tough on fixed costs. ...
- Invest in technology. ...
- Offer incentives to staff.
- Start Tracking Your Spending Habits. ...
- Get on a Budget. ...
- Re-Evaluate Your Subscriptions. ...
- Reduce Electricity Use. ...
- Lower Your Housing Expenses. ...
- Consolidate Your Debt and Lower Interest Rates. ...
- Reduce Your Insurance Premiums. ...
- Eat at Home.
The White House announced that single borrowers earning less than $125,000 per year, or households earning less than $250,000, are eligible for $10,000 in loan forgiveness. Borrowers who fall under the income caps and received Pell Grants in college will receive an extra $10,000 – totaling $20,000 in forgiveness.How do I know if my student loans qualify for loan forgiveness? ›
To be eligible for forgiveness, you must have federal student loans and earn less than $125,000 annually (or $250,000 per household). Borrowers who meet that criteria can get up to $10,000 in debt cancellation. If you also received a Pell Grant during your education, you can qualify for up to $20,000 in forgiveness.Is Great Lakes borrower a federal student loan? ›
How Great Lakes Can Help You With Your Student Loans. Great Lakes is a U.S. Department of Education federal student loan servicer. We help with student loan questions, repayment, consolidation, payment relief, and more.
What student loans are not eligible for forgiveness? Private student loans, by definition, are private and are not eligible to be forgiven. These are loans the borrower owes to student loan providers and not the federal government.What happens if the loan forgiveness is denied? ›
You will remain responsible for repaying your loan according to the terms of the promissory note you signed. You should talk to your loan servicer about repayment options if you have a Direct Loan or Federal Family Education Loan Program loan.Is there an income requirement for loan forgiveness? ›
There is no income requirement to qualify for PSLF.Do loans get forgiven after 10 years? ›
Under the federal program, eligible borrowers can have their loans discharged after 10 years if they meet eligibility requirements.Does depression qualify for student loan forgiveness? ›
Federal student loan borrowers qualify for student loan forgiveness if they suffer from any mental or physical disability that is severe, permanent and prevents them from engaging in substantial gainful activity.At what age will my student loans be forgiven? ›
Revised Pay As You Earn (REPAYE) works much the same way as Pay As You Earn. Under this plan, your payments will be capped at 10% of your discretionary income. Undergraduate loans are forgiven after 20 years, while graduate school loans are forgiven after 25 years.What is the maximum student loan forgiveness? ›
Federal Pell Grant recipients may be eligible for up to $20,000 in debt relief, and other federal student loan borrowers may be eligible for up to $10,000 in debt relief.Is Great Lakes student loans part of Navient? ›
Why did my student loans disappear from my credit report? Your student loan disappeared from your credit report because your loan servicer made a mistake, or you fell into default more than 7 years ago. Remember, even if your loans no longer appear on your credit report, you're still legally obligated to repay them.How can I get all my debt forgiven? ›
Filing for Chapter 7 bankruptcy could discharge (forgive) all of your credit card debt. However, bankruptcy should only be considered as a last resort option due to the lasting damage it will cause to your credit. Bankruptcy will remain on your credit for up to 10 years after the filing date.
What happens to my loans if I die? If you die, then your federal student loans will be discharged after the required proof of death is submitted.Do refinanced loans qualify for forgiveness? ›
Refinancing does not necessarily disqualify you from loan forgiveness. If you refinance your student loans with a private lender and find yourself unable to repay the debt, you may ask the private lender for relief. As mentioned earlier, private lenders may reach a debt settlement agreement with delinquent borrowers.