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Tips for Prioritizing Education Loan Repayment

March 3, 2017

Graduating with student loan debt has become the norm for college graduates. With the cost of attending a university rising each year, the average Class of 2016 graduate has accumulated almost $40,000 in student loan debt. As a young professional making a full-time income for the first time, finding the motivation to pay off debt can be difficult. Some people struggle to make repayment a priority because of existing credit card debt or options such as deferment or forbearance. However, one of the first steps to a solid financial future is eliminating debt as quickly as possible — so making education loan repayment a priority is crucial. Education loan debt is part of your debt portfolio, so like your credit cards, you should have a plan in place to pay it off as quickly as possible. If you are trying to change your mindset when it comes to paying down your student loan debt, here are a few tips to get you started:

Get Motivated

It is easy to let your student loans slip your mind and not think about them except for once a month when you send in your payment, but this mindset is not going to get you out of debt faster. Consider what will motivate you to pay off your loans and become debt-free. Calculate the amount of interest you will end up paying if you wait until the end of your loan term to pay it off. Then, calculate the amount you would pay in interest if you paid down your loan a few years earlier. What could you do with the extra money? Find something that inspires you to eliminate your debt faster.

Set Goals

In addition to getting motivated, another tactic you can use to help you stay on track is goal setting. Determine when you would like to have your loans paid off and set a goal to become debt-free by that point. You can also create more short-term goals such as paying off a certain amount per year. Consider using Dave Ramsey’s snowball or avalanche methods to chip away at your debt, one loan at a time. While you are doing that, do not forget to explore whether or not refinancing your student loans could potentially lower the amount of interest that you owe over the life of your loan significantly.  Setting goals and coming up with a repayment plan will make you more accountable and disciplined for eliminating your debt.

Develop Your Action Plan

To reach your goals and pay off your debt faster, you will need to go above and beyond the minimum loan payment each month. In order to allocate more money to your student loans, you may need to start budgeting or rewrite your budget to account for a larger monthly loan payment. Try to cut costs where you can, such as consolidating or eliminating services (phone, cable, cell, etc.), cooking more meals at home, or spending less money on clothing and entertainment. If your budget is already tight and you are struggling to find areas to cut back, consider an alternative source of side income to make money in addition to your primary job. You can do freelance work, open an Etsy shop, or even walk dogs in your free time for extra cash to put toward your student loans. If you are interested in the potential for a lower monthly payment or lower interest rates, find out if refinancing or consolidating your student loans through a private lender is a good fit for you. Either way, paying off your student loans should be a priority in every financial decision you make. If you have any excess money after savings and monthly expenses, put it toward paying off your debt — a little goes a long way.

Put Your Education Loans First

To pay off your student loans and pay off your debt as fast as possible, you need to make it a top priority in your life. Instead of ignoring your loans and only paying the minimum each month, refinancing and paying your loans off early will save you money in the long-run. Although it may seem difficult and overwhelming at first, with a lot of motivation, goal setting, and a plan, you can make it happen.

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2020-02-21
This Week in Student Loans: February 21

Please note: Education Loan Finance does not endorse or take positions on any political matters that are mentioned. Our weekly summary is for informational purposes only and is solely intended to bring relevant news to our readers.

  This week in student loans:

30,000 borrowers are being charged for student loans that were already discharged

30,000 borrowers of student loans from a private lender thought their loans would be discharged when they declared bankruptcy years ago – however the lender disagreed, and they are continuing to be charged. The borrowers are now suing the U.S. Bankruptcy court for the Eastern District of New York.  

Source: Yahoo Finance

 

USC announces new tuition-free plan

The University of Southern California (USC) recently announced two major changes to its financial aid plan, one of which makes attendance tuition-free for applicants whose family's household income falls at or below $80,000. Owning a home will also not be counted in the calculation to determine a student's financial need.  

Source: Forbes

 

Younger employees want help paying down student debt

A recent report from consumer research firm Hearts and Wallets revealed that younger workers would rather have employers assist them with repaying student loans than help them save for retirement. Two-thirds of workers of ages 21 to 27 said companies should help them pay down student debt, while just 27% said companies should help them save for retirement.  

Source: Investment News

 

49% of Americans expect to live paycheck to paycheck this year

A new survey revealed that a whopping 49% of Americans expect to live paycheck to paycheck through each month of this year. It also revealed that 53% don't have an emergency fund that covers at least three months of expenses. Despite the negative sentiment, 91% did say they wanted to develop better money habits in 2020.  

Source: Forbes

    That wraps things up for this week! Follow us on FacebookInstagramTwitter, or LinkedIn for more news about student loans, refinancing, and achieving financial freedom.  
 

Notice About Third Party Websites: Education Loan Finance by SouthEast Bank is not responsible for and has no control over the subject matter, content, information, or graphics of the websites that have links here. The portal and news features are being provided by an outside source – the bank is not responsible for the content. Please contact us with any concerns or comments.

2020-02-18
Current LIBOR Rate Update: February 2020

This blog provides the most current LIBOR rate data as of February 10, 2020, along with a brief overview of the meaning of LIBOR and how it applies to variable-rate student loans. For more information on how LIBOR affects variable rate loans, read our blog, LIBOR: What It Means for Student Loans.

 

What is LIBOR?

The London Interbank Offered Rate (LIBOR) is a money market interest rate that is considered to be the standard in the interbank Eurodollar market. In short, it is the rate at which international banks are willing to offer Eurodollar deposits to one another. Many variable rate loans and lines of credit, such as mortgages, credit cards, and student loans, base their interest rates on the LIBOR rate.

 

How LIBOR Affects Variable Rate Student Loans

If you have variable-rate student loans, changes to the LIBOR impact the interest rate you’ll pay on the loan throughout your repayment. Private student loans, including refinanced student loans, have interest rates that are tied to an index, such as LIBOR. But that’s not the rate you’ll pay. The lender also adds a margin that is based on your credit – the better your credit, the lower the margin. By adding the LIBOR rate to the margin along with any other fees or charges that may be included, you can determine your annual percentage rate (APR), which is the full cost a lender charges you per year for funds expressed as a percentage. Your APR is the actual amount you pay.

 

LIBOR Maturities

There are seven different maturities for LIBOR, including overnight, one week, one month, two months, three months, six months, and twelve months. The most commonly quoted rate is the three-month U.S. dollar rate. Some student loan companies, including ELFI, adjust their interest rates every quarter based on the three-month LIBOR rate.

 

Current 1 Month LIBOR Rate - January 2020

As of Monday, February 10, 2020, the 1 month LIBOR rate is 1.66%. If the lender sets their margin at 3%, your new rate would be 4.66% (1.67% + 3.00%=4.66%). The chart below displays fluctuations in the 1 month LIBOR rate over the past year.

  Chart displaying current 1 month LIBOR rate as of February 10, 2020.

(Source: macrotrends.net)

   

Current 3 Month LIBOR Rate - January 2020

As of Monday, February 10, 2020, the 3 month LIBOR rate is 1.71%. If the lender sets their margin at 3%, your new rate would be 4.71% (1.71% + 3.00%=4.71%). The chart below displays fluctuations in the 3 month LIBOR rate over the past year.

  Chart displaying current 3 month LIBOR rate as of February 10, 2020. (Source: macrotrends.net)  

Current 6 Month LIBOR Rate - January 2020

As of Monday, February 10, 2020, the 3 month LIBOR rate is 1.72%. If the lender sets their margin at 3%, your new rate would be 4.72% (1.72% + 3.00%=4.72%). The chart below displays fluctuations in the 6 month LIBOR rate over the past year.

  Chart displaying current 6 month LIBOR rate as of February 10, 2020. (Source: macrotrends.net)  

Current 1 Year LIBOR Rate - January 2020

As of Monday, February 10, 2020, the 1 year LIBOR rate is 1.80%. If the lender sets their margin at 3%, your new rate would be 4.80% (1.80% + 3.00%=4.80%). The chart below displays fluctuations in the 1 year LIBOR rate over the past year.

  Chart displaying current 1 year LIBOR rate as of February 10, 2020. (Source: macrotrends.net)  

Understanding LIBOR

If you are planning to refinance your student loans or take out a personal loan or line of credit, understanding how the LIBOR rate works can help you choose between a fixed or variable-rate loan. Keep in mind that ELFI has some of the lowest student loan refinancing rates available, and you can prequalify in minutes without affecting your credit score.* Keep up with the ELFI blog for monthly updates on the current 1 month, 3 month, 6 month, and 1 year LIBOR rate data.

 
 

*Subject to credit approval. Terms and conditions apply.

 

Notice About Third Party Websites: Education Loan Finance by SouthEast Bank is not responsible for and has no control over the subject matter, content, information, or graphics of the websites that have links here. The portal and news features are being provided by an outside source – the bank is not responsible for the content. Please contact us with any concerns or comments.

2020-02-07
This Week in Student Loans: February 7

Please note: Education Loan Finance does not endorse or take positions on any political matters that are mentioned. Our weekly summary is for informational purposes only and is solely intended to bring relevant news to our readers.

  This week in student loans:

The Dangers Of Using A 529 Plan For Student Loan Debt

The Setting Every Community Up for Retirement (SECURE) Act that was signed into law on December 20 allows families with a 529 college savings plan to use some of the savings to pay off student loan debt. Previously, you would have to pay a 10% penalty on 529 earnings (not contributions) in order to use the savings for non-qualified expenses, such as paying student loans. This Forbes article explains the limitations of using such plans to pay off student debt.  

Source: Forbes

 

How Each State is Shaping the Personal Finance IQ of its Student

According to CNBC, there's increasing research showing that students who are required to learn financial literacy or take personal finance courses in high school make better financial decisions in their early adult life. See how certain states are taking measures to ensure their students are more financially literate in this article.  

Source: CNBC

 

Student Loan Debt Statistics for 2019

Yahoo Finance has released a report on the state of student loan debt for the year of 2019, including information about the average student loan debt per borrower and student loan debt by state, age, race, and gender.  

Source: Yahoo Finance

 

Ohio Dad Got 55,000 Identical Letters About His Daughter's Student Loan

An Ohio father of a student loan borrower was shocked when he received 59 bins of mail containing 55,000 identical letters from the servicer of his daughter's student loans. The delivery was so large that the man had to pick up the delivery at the back door of the post office and had to make two trips. The servicer claimed it was due to a glitch in the outgoing mail process and that they would work to ensure the mistake would not happen again. When asked what he might do with the letters, the father said, "I just may start a fire, a bonfire, and burn it all," while laughing.  

Source: CNN

    That wraps things up for this week! Follow us on FacebookInstagramTwitter, or LinkedIn for more news about student loans, refinancing, and achieving financial freedom.  
 

Notice About Third Party Websites: Education Loan Finance by SouthEast Bank is not responsible for and has no control over the subject matter, content, information, or graphics of the websites that have links here. The portal and news features are being provided by an outside source – the bank is not responsible for the content. Please contact us with any concerns or comments.