Avoid Student Loan Stress With This Debt Pay Down Plan

Jon Gelberg, Executive Editor, Contributor, Inc. Media
November 1, 2019

This Student Loan Paydown Plan Can Help You Ease Your Debt Burden

Yasmin Naghash’s dream of becoming an attorney came true upon graduation from American University’s Washington College of Law. Her sense of accomplishment, however, was tarnished by the unexpected and mounting pressure of her six-figure student debt and the feeling that there was no light at the end of the tunnel. The burden, she says, was both financial and psychological. 

The terms of her original law school student loans with the government would take 30 years to pay off in full. To put that time in perspective, that’s ten times as long as it took to obtain her law degree. 

Yasmin is not alone; not by a long shot. According to the National Association of Realtors Research Department and American Student Assistance, U.S. student loan debt stands at $1.4 trillion, amounting to 10% of all outstanding debt and 35% of non-housing debt.

Today’s Economic Crunch

Young professionals and others entering the workforce are facing financial pressures unlike any recent generation. College graduates and those with advanced degrees are up against significant amounts of student debt. Compounding this, the cost of living is growing as housing costs continue to rise in cities across America.

In the National Association of Realtors’ Student Loan Debt and Housing Report 2017, it was clear that student loans had a negative impact on many parts of the respondents’ lives. As a result, many millennial borrowers are delaying major life events like marriage, taking a vacation, or looking for a job where they’d be happier than in their current (higher paying) one.

When it came to housing choices, student debt had a particularly odious impact on respondents: 

  • 83% of non-homeowners cite student loan debt as the primary factor delaying them from buying a home.
  • 22% were delayed by at least two years in moving out of a family member’s home.

Debt and the Stress Related to It 

A recent Oliver Wyman survey indicates that 80% of working professionals with student debt consider their student debt to be a source of either significant or very significant stress. The effect of such stress is almost incomprehensible.

Some well-planned strategies, though, reduce both the burden and the stress.

Working alongside the right banking partner, you can identify your long- and short-term financial goals and develop a strategy designed to best serve those goals.

Treat Your Loan Like a Business

Student loan repayment plans can be analogous to the launch of a new business. Just as a well-crafted business plan carefully lays out a roadmap to success (including the path to profitability), an intelligently structured student loan repayment plan carefully lays out the most efficient and economical way to bring the debt down to zero.

“When you’re developing a plan to tackle your student loan debt, start by seeking out the lowest interest rate on the market,” said James Herbert, head of student loan refinancing for First Republic Bank. “Securing a low interest rate is the number one way to decrease your monthly payment and long-term cost of borrowing.”

Learn how to pay off your student loans in a way that fits for your financial situation and goals.

The Power of Refinancing

Simplifying student loan debt through refinancing may enable borrowers to slash the cost of their debt. Shortening the duration of the loan and taking advantage of low interest rates are steps that could potentially save borrowers thousands, even hundreds of thousands, over the term of the loan.

“Consider working with a private banker who can guide you through the process, making sure you take full advantage of the opportunity. A banker’s personal attention can ensure the rate and term you select helps you meet your unique financial and life goals. Whether you’re saving to buy a home, have children, travel, or simply saving to save, refinancing your student loans may save you a massive amount of interest while also letting you choose the loan that’s right for your life today, not when you took on the debt,” continued James.

Combining your student loans into one will also ease the process of managing your monthly payments and minimize the time spent on your loans and the risk of missing an installment. Even if you’ve already refinanced your loans once, refinancing again with a different provider may help you save money and streamline your payment process.

Student loan repayment can be stressful, yet with preplanning and guidance from a trusted financial advisor, graduates can keep their loans on track and focus on what they originally set out to do: launch their career. Learn more about the benefits of refinancing student loans.

A Life Changing Experience

Yasmin made the decision to refinance with First Republic1, and while it may sound like hyperbole, doing so has been a life-changing experience for her.

“I not only have more disposable income at the end of each month either to save or spend, I know I will be student-loan-free five years from now,” Yasmin said. “Before I refinanced my law school loans, I felt a sense of personal failure that despite having a graduate school degree, I could not free myself from its financial chains for 30 years; but now that getting to the finish line is quite attainable, I live with a newfound personal freedom that you just don’t get anywhere.”

Your student loan debt doesn’t have to be a burden. Learn more about the benefits of refinancing student loans with First Republic and get a custom refinance rate estimate in under a minute.

Refinance your student loans – fixed rates as low as 1.95% APR with discounts.

1. The terms of this loan may differ from terms of your current loan(s). For example, this loan does not contain special features such as forbearance periods or income-based repayment plans available for some student loans. If the debt you are refinancing was all incurred for qualified higher education expenses or to refinance a qualified education loan under the Internal Revenue Code, the interest you pay on this loan may benefit from certain deductions thereunder, and it may also be the case that this loan will not be dischargeable in bankruptcy. Applicants should contact their legal, tax and financial advisors for advice on deciding whether this is the right product for them.

The strategies mentioned in this article may have tax and legal consequences; therefore, you should consult your own attorneys and/or tax advisors to understand the consequences of any strategies mentioned in this document. This information is governed by our Terms and Conditions of Use.

A version of this article originally appeared on Inc.