How to cut 3 years off your student loan interest payments
A little-known loophole that could save you as much as $14,000 over the next 3 years
How would you like to slice as much as $1,217 off your student loans? That would be good right?
In our previous blog post on debt consolidation during the 90-day ‘grace period’ we showed you how to do that.
Now, let’s move onto something even better and talk about how the Pay As You Earn (PAYE) program can help you chop an additional $14,000 off your future interest payments.
Here’s how the PAYE program works…
Many graduates these days find it hard to land a full-time position right out of school. Unfortunately, that leaves most fighting off a considerable amount of debt with minimal financial resources. Not only is this stressful – it’s unfair, which is why the government created the Pay As You Earn (PAYE) program.
This income-based repayment program or (IBR as it’s also know) the U.S. Department of Education gives you some much needed breathing room by letting you adjust your monthly bills to match your budget. In many cases that means graduates are able to drop their monthly payments to a bare minimum.
Most are overjoyed with this upfront relief. But there’s an even bigger benefit that most overlook.
Big interest savings
During the first 3 years of this program, if your monthly payments are not enough to cover the interest on your loans, the government automatically forgives this part of your debt.
What would that look like?… An Example:
If you have $36K of debt spread across several different types of loans, the interest on your loans could be as much as $285 – $405 per month. And that’s without paying down any of the principal!
But under the PAYE program, you could qualify to drop your total monthly payments down to $50 – or less – and the Federal government will pick up the remaining $235 – $355 in interest due.
This means, during the 3 years this exemption applies, you could avoid paying a total of $10,260 – $14,580.
Note: This program also lets you make overpayments on your loans without penalty. That’s important because then you can use the strategy of small monthly payments to avoid interest while making larger occasional payments to quickly knock down your principal debt.
Imagine how helpful those savings could be!
This approach could have a huge impact on your life. It could mean the difference between moving into your own home (and putting money in the bank as equity) or renting for the next 10 years. It could be the financial advantage you need to pay the bills while you’re looking for work… or give you the long-term savings you need for those big, important things in life. Basically, whatever it is you want, reducing your interest payments on your Federal loans will help you get there.
So don’t just grit your teeth and plow through the hardest years of your loans without relief.
There are thousands of dollars in savings in programs like PAYE, waiting for you – ready for the taking! If you’re ready to get started, click here and we’ll help you out.
