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Student Loan Refinancing vs. Public Service Loan Forgiveness

October 8, 2019

Graduates seeking enriching careers like doctors, nurses, and pharmacists can often graduate from school with a large amount of student loan debt. Student loan debt can be especially burdensome during residency. 

 

Many healthcare professionals look to Public Service Loan Forgiveness (PSFL) for relief. Public Service Loan Forgiveness is a federal government program under the U.S. Department of Education’s Direct Loan Program offered to forgive qualified candidates of their Federal Direct Loans. The PSLF program can be a good option for healthcare professionals, but it is vital to understand the qualifications.  

 

According to USA Today, the PSLF program has had 41,000 submissions, and only 206 applicants have qualified. When choosing how to proceed with your student loan debt, it is essential to be well informed and have all the facts before making a decision.

 

Let’s review the requirements of the Public Service Loan Forgiveness program, take a look at student loan refinancing, and review the qualifications of both programs to see which option could be right for you.

 

Facts About Public Service Loan Forgiveness

If you are a borrower of student loan debt and you work within the public or non-profit sector, you have probably heard of the PSLF program. 

 

If you ever played the game “telephone” as a kid, you’ll know that word-of-mouth from multiple individuals can get information and facts mixed up. According to Federal Student Aid, a division of the U.S. Department of Education, 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.” 

 

To fully understand this Act, let’s review the legislative history. 

 

The program created under the College Cost Reduction and Access Act of 2007 (P.L. 110-84) was designed to encourage student loan borrowers to remain and pursue careers in the non-profit and public sectors, as salaries in the private sector tend to be higher.

 

Loans Eligible for Public Service Loan Forgiveness

Certain federal loans are eligible for PSLF. The eligible loans for PSLF are non-defaulted loans under the William D. Ford Federal Direct Loan Program. 

 

You may know this as the Direct Loan Program or Direct Loans. According to the Department of Education, the loans provided under this program are: 

 

Direct Stafford

Undergraduates, vocational, or graduate students. Must be enrolled half-time in participating schools.

 

Direct Unsubsidized Stafford 

Undergraduates, vocational, or graduate students. Must be enrolled half-time in participating schools. 

 

Direct PLUS 

For parents of dependent students accepted for enrollment half-time in participating schools. As of July 1, 2006, graduate students are eligible.

 

Direct Consolidation 

Individuals with student loans that have defaulted but have made satisfactory arrangements to repay the loans. 

The Federal Family Education Loan Program and the Federal Perkins Loan Program, don’t qualify on their own for the PSLF program. However, if you have a loan within one of these two programs and consolidate them into a Direct Consolidation Loan, they can qualify. Now that we understand the type of eligible loans we’ll take a look at some qualifications.

 

Qualifying Repayment Plan

Borrowers seeking the PSLF program must have federal Direct Loans and be on a “qualified payment plan” known as an Income-Driven Repayment Plan (IDR). 

 

The 10-Year Standard Repayment Plan qualifies for PSLF, but to have a balance remaining, you must enter into an Income-Driven Repayment plan. If you do not enter an Income-Driven Repayment Plan, you won’t have a loan balance left to forgive since you will have paid it off by the time you qualify for PSLF.

 

Income-Driven Repayment Plans

Income-Driven Repayment plans base your monthly federal student loan payment on your income. Income-Driven Repayment Plans Include:  

 

Revised Pay As You Earn Repayment Plan or REPAYE Plan 

Bases the monthly payment on you (and spouse’s) adjusted gross income, family size, and state of residence.

 

Pay As You Earn or PAYE 

Monthly payments are based on your adjusted gross income and family size. You must be experiencing a financial hardship to qualify. You must also be considered a “new borrower” as of 10/1/2007 or after, or be someone who received an eligible Direct Loan disbursement on 10/1/2011 or after.

 

Income-Based Repayment or IBR 

Monthly payments based on your adjusted gross income and family size. Must be experiencing a financial hardship to qualify.

 

Income-Contingent Repayment or ICR 

Based on your monthly adjusted gross income and family size. Typically chosen if an individual can’t qualify for the Pay As You Earn Plan or Income-Based Repayment.Any changes to your income or your spouse’s income will affect your student loan payment. For example, if your salary increases, your student loan payment will as well. If you are married, both your income and your partner’s income are combined. Two combined incomes will increase your total income, likely increasing your monthly payment. 

 

Keep in mind: On an Income-Driven Repayment plan, be aware of the overall loan balance. A review of the total debt amount will take place when applying for a mortgage, credit card, or auto loan. A standard evaluation process for financial institutions is reviewing a borrower’s debt-to-income (DTI) ratio. Borrowers who have high DTI ratios may receive higher interest rates on their loans because financial institutions view these borrowers as higher risk. Your federal student loan balance could end up costing you in terms of higher interest rates on other types of loans. 

 

120 Qualified Payments

If you are on a qualified repayment plan, the next step is making 120 qualifying payments. If the total student loan balance is of concern and you plan on paying extra monthly, do so with caution. When paying over the minimum amount you will need to contact the loan servicer. For example, a common federal student loan servicer is FedLoan Servicing. When you contact the federal student loan servicer, you have to request that the extra amount paid is not applied to cover future payments. To qualify for PSLF, you cannot receive credit for a qualifying Public Service Loan Forgiveness payment if no payment is due. You will also need to pay the full amount on the bill for it to be considered a qualified payment. 

 

A common misconception about the PSLF program is that payments need to be consecutive. Payments do not need to be consecutive to count as qualifying in some circumstances. For example, if you work for a qualifying employer and made qualified payments, but then begin to work for a non-qualified employer, you will not lose credit for the qualified payments made before working for the non-qualifying employer.1

 

It is essential to know that your payment cannot be any later than fifteen days after your due date to be considered a qualified payment. On loans placed into an in-school status, grace period, deferment, or forbearance, you cannot make a qualifying monthly payment. If your loan is in deferment or forbearance to make a qualified payment, you must contact the servicer and request the status waived. According to the federal government, the best way to ensure that you are making on-time payments is to sign up for direct debit with your loan servicer. You need to be working full-time for a qualified employer while making payments on the loan.

 

1 https://studentaid.ed.gov/sa/repay-loans/forgiveness-cancellation/public-service#qualify

 

Qualified Institution/Employer

Your employer plays a vital part as to whether or not you can qualify for PSLF. A qualifying employer should be a government agency or certain types of non-profit organizations. If PSLF is important to you and part of your financial plan, it is imperative that you verify this internally. If at any point your employer is no longer a qualified institution, they are not responsible for notifying you. For example, in the healthcare industry, it is not uncommon for hospitals to convert from a non-profit to a for-profit institution. 

 

To qualify for PSLF, you need to be working full-time for a qualifying employer. Requesting the Employment Certification Form annually from your qualified employer can keep you on track for the program. 

 

Applying for Public Service Loan Forgiveness

The Public Service Loan Forgiveness program is common among borrowers with federal student loans, but the qualifications are not well-known. For that reason, we have gathered some documents and information for you. First, you should complete and submit the Employment Certification Form for Public Service Loan Forgiveness annually. If you change employers, you should also have this form completed by your new employer. If you do not submit your Employment Certification Form yearly, you will need to submit it when you apply for the PSLF program. When applying for the PSLF program, you will need to submit one for each employer where you worked while making qualified payments. If you are looking for the Employment Certification Form you can download it here.

 

You can download the PSLF application here. Once you’ve completed your forms, you have three options for submission. Forms can be mailed, faxed, or submitted through your student loan servicer. Mail your completed application to:

 

U.S. Department of Education 

FedLoan Servicing 

P.O. Box 69184 

Harrisburg, PA 17106-9184 

 

To fax your information use 717-720-1628. The last option provided for submitting your Public Service Loan Forgiveness is uploading the application to the servicer. 

 

The Reality of Public Service Loan Forgiveness

The PSLF program only allows forgiveness for certain types of federal loans as described above. To date, the Public Service Loan Forgiveness program has rejected 99% of applicants2. If you want to qualify for PSLF successfully, you must pay close attention to the detailed eligibility requirements of the program. Many of the requirements of the PSLF program can be difficult to understand or even find. To the benefit of those who refinance, student loan refinance companies are obligated by law to disclose information regarding their offerings. Some would say that student loan refinancing has a straightforward process when compared to the PSLF program. Not only is student loan refinancing transparent and held to a number of standards, but it can also really empower borrowers with options. Borrowers who previously had little control over their student loans can now choose what repayment plan works best for their financial future.

 

There is no “one-size fits all” answer. You need to know your options for managing your student loan debt. Whether you choose to pursue Public Service Loan Forgiveness or refinance your student loans is your decision. Understand that if you choose to pursue PSLF, there is a possibility you will not qualify. Remember, according to an analysis done by USA Today, only 1 percent of student loan borrowers who applied for the PSLF program have qualified. 

 

When deciding what path to take, consider what your financial goals are and what sets you up for the most success in the future. 

 

2 https://ifap.ed.gov/eannouncements/091918FSAPostsNewReportstoFSADataCenter.html

 

Student Loan Refinancing 

Student loan refinancing has gained popularity within the last five years. Private companies are offering student loan refinancing as a way to make student loan debt more manageable. Many benefits can be achieved when qualified borrowers refinance their student loans. Most notably they can change repayment terms to fit their financial goals and lifestyle, and combine multiple federal and private loans into one single loan with a simple monthly payment, while likely reducing the amount paid over the life of their loans. 

 

The new interest rate provided is based upon a borrower’s credit history and credit score, in addition to other eligibility criteria, depending on the financial institution. Overall, refinancing student loans can have an impact on a borrower’s interest rate, repayment terms, and benefits. 

 

Interest Rates

When you take out federal studentloans, all borrowers receive the same interest rate on a given Federal Direct Loan. 

 

The federal government does not review a borrower’s or cosigner’s credit history or credit score. When you refinance your student loans, the private company will take a look over your credit history and credit score. The private student loan refinance company will also review additional information, like income. 

 

Many companies that refinance student loans will offer both variable and fixed rate loans. If you previously had a variable rate loan and qualify to refinance, you can select a fixed rate loan instead and vice versa.

 

Refinancing provides qualified borrowers the opportunity to make changes to existing student loan terms.

 

Repayent Terms & Cosigners

Federal student loans do not provide borrowers with an option regarding the repayment terms on the loan. Some federal loans provide a 10-year standard repayment plan, but other federal loans can span 25 to 30 years. When refinancing your student loans, you can select from the repayment terms offered by the company. Many companies offer repayment terms of 5, 7, 10, 15, and 20 years. 

 

Can you imagine paying off your student loan debt in five years? Many borrowers find that repaying their student loans faster has helped them to save money on interest. Having the ability to select repayment terms can allow borrowers the flexibility to reach other financial goals in their life. Generally, the repayment term selected will affect the interest rate on your new loan after you refinance.

 

If you took out a private loan for college, it is likely you may have needed a cosigner. When you refinance student loans, you could potentially remove the cosigner from the loan if you have established the necessary credit to take out a loan on your own. Removing a cosigner relieves the cosigner from the financial burden and responsibility of student loan debt and frees up the cosigner’s credit. Be prepared when refinancing your student loans in case there is a loss of benefits.

 

Loss of Benefits

Federal loans offer benefits for borrowers that may not be available through a private lender like a student loan refinance company. It’s imperative to read the guidelines and fully understand them before moving forward with refinancing your student loans. One of the biggest setbacks of student loan refinancing is that once you’ve refinanced your student loans through a private company, you no longer qualify for the PSLF Program.

 

When you refinance your federal student loan, the debt is paid off by the student loan refinance company, and a new loan is issued to you by the refinance company. Therefore, there is no federal student loan anymore. Since that loan is now paid off, there is no balance to forgive, and in turn, you cannot utilize PSLF. This is not the only drawback of refinancing.

 

Many student loan refinance companies offer different benefits regarding deferments or forbearances and make decisions on a case-by-case basis. Benefits that may have been utilized while repaying your federal student loan may no longer be available through a private lender.

 

Public Service Loan Forgiveness or Student Loan Refinancing? Which is Right for You?

Now that you have an understanding of the options available to you as a healthcare professional, consider what makes the most financial sense for your situation.

 

Student loan refinancing may be a better option if you want to pay off your debt quickly since student loan refinancing allows you to change repayment terms and may have lower interest rates. Changing repayment terms can allow you to pay down your debt faster or even extend repayment. 

 

Another situation where refinancing may be a more attractive offer is if rates achieved by refinancing are lower than rates on your federal loan or your private loans. By achieving a lower interest rate, you will be paying less interest over time. If you are not planning on applying for PSLF for your federal loans, or you have private student loans that carry high-interest rates, you should look into the options available for refinancing student loans. 

 

However, by refinancing your federal student loans you will lose many benefits and protections available to federal student loan borrowers. Keeping your federal protections may be more beneficial than refinancing your student loans. 

 

Whether you choose to pursue PSLF or student loan refinance, you should be knowledgeable about the requirements and the pros and cons of each option. 

 

See How ELFI Can Help You Refinance Your Student Loans

 

 


 

 

Subject to credit approval. Terms and conditions apply.

 

NOTICE: Third Party Web Sites: 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. 

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pharmacist smiling after refinancing student loans
2020-08-06
A Pharmacist’s Guide to Student Loan Refinancing

Becoming a pharmacist can be a lucrative career decision. However, it requires a significant amount of education. According to the U.S. Bureau of Labor Statistics, the typical entry-level education requirement for pharmacists is a doctoral or professional degree. To get the necessary degrees, you likely borrowed a significant amount of money. In fact,  the Pharmacy Times reported that the average student loan debt for pharmacists is over $163,000.    By Kat Tretina   Despite the hefty student loan burden, your career path comes with high earning potential. As of 2018, the median salary was $126,120 per year. With such a large income, student loan refinancing is a smart strategy, especially if you work in the private sector.   

Why you should refinance pharmacy school loans

If you work in the private sector as a pharmacist — meaning you work for a pharmacy like Walgreens or CVS rather than a non-profit hospital or health organization — you’re ineligible for Public Service Loan Forgiveness, even if you have federal student loans. If you have high-interest student loan debt, that means you’re a prime candidate for student loan refinancing.    Student loans for graduate and doctoral degrees tend to have the highest interest rates of any education loan. Even Grad PLUS Loans, a form of federal loan, have sky-high interest rates. For loans disbursed after July 1, 2019, and before July 1, 2020, the interest rate is a whopping 7.08%. With such a high rate, your loan balance can quickly balloon out of control.    With student loan refinancing, you take out a loan from a lender like ELFI* for the amount of your combined existing debt. The new loan has completely different repayment terms, such as length of repayment and interest rate. Your old loans are consolidated together, so now you’ll have just one loan and one easy monthly payment.   

Benefits of refinancing pharmacy school loans

There are two main benefits to student loan refinancing  

1. You can save money

With a pharmacist’s salary and good credit, you could qualify for a lower interest rate when you refinance your debt, allowing you to save a significant amount of money.    For example, let’s say you had $163,000 in student loan debt at 7.08% interest and a 10-year repayment term. Over the course of your repayment, you’d pay back a total of $227,915; interest charges would add $64,915 to your loan cost.    But let’s say you refinanced your debt and qualified for a 10-year loan at just 5% interest. You’d pay back a total of just $207,464. Refinancing your loans would allow you to save $20,451.    Use the student loan refinance calculator to find out how much money you can save.*   

2. You can reduce your monthly payment

If you have a large amount of student loan debt, your monthly payments may be more than you can afford. If that’s the case, student loan refinancing can help make your payments more affordable.    When you refinance your debt, you can opt for a longer repayment term. With a longer term, you may pay more in interest, but the tradeoff may be worth it to give yourself more breathing room with your cash flow.    Let’s say you had $163,000 in student loan debt with a 10-year repayment term. At 7.08% interest, your minimum monthly payment would be a whopping $1,899 per month. If you didn’t qualify for a lower interest rate, but extended your repayment term to 15 years, you’d reduce your monthly payment to just $1,472 per month, freeing up $427 from your budget.  

How to refinance pharmacy school loans

To refinance your loans, follow these four simple steps:   

1. Find out if you meet the eligibility requirements

Each refinancing lender has its own eligibility criteria. At Education Loan Finance, borrowers need to meet the following requirements: 
  • Must be a U.S. citizen or permanent resident
  • Must have at least $15,000 in student loans
  • Must have a bachelor’s degree or higher
  • Must have a minimum income of $35,000
  • Must have a credit score of at least 680
  • Must have a minimum credit history of 36 months
  • Must have received a degree from an approved post-secondary institution
 

2. Ask a friend or relative to cosign the loan

If you don’t meet the minimum credit or income requirements, consider asking a friend or relative with good credit and reliable income to cosign the loan application with you. A cosigner shares responsibility for the loan with you, lessening the lender’s risk. Having a cosigner on the application increases your chances of getting approved and qualifying for a lower interest rate than if you applied on your own.   

3. Request a loan estimate

Before submitting a loan application, get an estimate so you know what interest rate and loan term to expect. With ELFI, you can get a rate quote without affecting your credit score so you can select the right loan that works for you.*   

4. Submit your loan application

Once you find a loan that matches your needs, you can complete the loan application. You’ll be asked to enter information about yourself, including your name, address, Social Security number, employer, income, and current loans.   

4 other options for managing your loans

While student loan refinancing can be a smart idea for pharmacists, it’s not for everyone, especially if you don’t work in the private sector. If you decide against refinancing your loans, you may be able to get some help with your student loan debt in the form of loan forgiveness, reduced payments, or repayment assistance.   

1. Income-driven repayment plans

If you have federal student loans and can’t afford your payments, you may eligible for at least one of the four income-driven repayment (IDR) plans. Under these plans, the federal government extends your loan term to 20 to 25 years and caps your monthly payments at a percentage of your discretionary income. Depending on the repayment plan, your income, and your family size, you could significantly reduce your monthly payment. Some borrowers even qualify for $0 payments.   

2. Public Service Loan Forgiveness

If you have federal Direct student loans and work for a government agency or non-profit organization, you may qualify for loan forgiveness through Public Service Loan Forgiveness (PSLF). With PSLF, the government will forgive the remaining loan balance after you work for an eligible employer for 10 years and make 120 qualifying payments.   

3. Substance Use Disorder Workforce Loan Repayment Program

The National Health Service Corps (NHSC) operates the Substance Use Disorder Workforce Loan Repayment Program. Under this program, eligible pharmacists can receive up to $100,000 in student loan repayment assistance. In exchange, you have to make a service commitment to work in a substance use disorder site with a health professional shortage area as designated by the NHSC. For more information, visit the NHSC website  

4. National Institutes of Health Loan Repayment Program

Highly qualified pharmacists willing to commit to biomedical or biobehavioral research careers can receive up to $50,000 in student loan repayment assistance. In return, you must commit to working in a research area in an approved subject. Visit the National Institutes of Health website for more information.   

Repaying your student loans

If you’re a pharmacist with education debt, you should know that you’re an excellent candidate for student loan refinancing. Whether you want to save money or lower your monthly payments, refinancing your loans can help you achieve your goals.*   
  *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.
woman asking employer for student loan assistance
2020-08-05
How to Ask Your Employer to Help Pay Student Debt

These days, employers offer all kinds of benefits to keep employees, from kombucha on tap and innovative new office spaces to ping pong tables and video game rooms. The list of benefits seems to grow all the time.   When you think about it, though, how much do you really need that kombucha on tap? Instead, what many graduates need is help with their ever-mounting student loans. In combination with other methods of dealing with student loan debt, employers can play a valuable role in ensuring their employees’ financial stability.   Employers are beginning to recognize this trend, as well. That’s why some have begun to offer help to employees with student loan debt. While an uncommon practice at the moment, some companies now offer options to help employees pay back their student loans.   The practice is rapidly becoming more popular, and if you’re lucky, your employer may already offer a student debt relief program. Here are several ways employers are already helping to reduce their employees' student loan debt.  

Financial Education

Employers have begun to understand that their own financial success is tied to the financial success of their employees. As a result, some employers have begun to offer financial education opportunities.   These opportunities come in many forms, including workshops, webinars and even counseling. While many employees already have a firm grasp on financial concepts, these programs can still be incredibly beneficial to those weighed down by student debt as they often cover lesser-known tactics and reinforce familiar strategies.  

Student Loan Repayment Signing Bonuses

Another method of helping employees with student debt is the signing bonus. For example, some companies offer $1,000 towards student loans for new hires. This $1000 can drastically reduce the amount graduates pay in interest over the life of their student loans and is an effective way for companies to hire and keep dedicated, hardworking employees.  

Employer Repayment

The most exciting benefit employers are beginning to adopt is direct assistance with student loans. Now, in addition to savvy fiscal advice, some companies are backing up their support with dollars and cents.   A few companies now offer yearly bonuses to help pay back student loans. One of the most generous of these companies is Nvidia. Employees earn $6,000 a year towards their student loans up to a $30,000 maximum. Several companies offer comparable or lower amounts. Regardless of the repayment amounts, this innovative strategy provides a new way to fight back against student debt.   A variation of this policy is occasionally used, as well. In this variation, employees who don’t take their PTO can trade their PTO days for student loan assistance. With many in the United States not taking their PTO days anyway, this is a compelling option for student loan borrowers.  

Contributions to 401(k) Plans

It may seem strange for 401(k) contributions to go hand-in-hand with paying off student debt. You might even expect to have to choose between them.   If you’re employed by Abbott Laboratories, though, you don’t have to choose. Employees who contribute at least 2% of their pay toward student loans are eligible for the full 5% employer matching in their 401(k), even if they do not otherwise contribute to their 401(k). Abbott Laboratories is the first company to offer this incentive to help employees to pay off student debt, and hopefully many companies will follow in their footsteps.   Sadly, these types of programs are not as commonly offered as they should be, but that isn’t necessarily bad news for you.   If student loan assistance programs are something that you would like to see at your company, then make an appointment to speak with either your boss or to human resources. In this day and age, the competition for the best employees is fierce, and employers are always looking for ways to keep employees happy. In some cases, it may even be cheaper than a raise.   It’s also worth mentioning your interest in such programs while negotiating your salary and benefits package for a new job. They may include it as an additional benefit.   If your employer already provides these benefits, that’s fantastic! You’re already one step closer to being unburdened by student debt. If you're curious about how to finish the job and free yourself from student debt completely, one great way to do that is Student Loan Refinancing. You can learn more here.  
  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.
calculator showing interest
2020-08-04
Student Loans: What is the Difference Between a Principal and an Interest Payment?

If you’re planning on going to college, you should be prepared for potentially high costs. The average cost of tuition and fees at a public four-year university for an in-state student is $10,440, while it’s $36,880 at a private school.    By Kat Tretina   While those numbers are pricey enough on their own, financing can add to the expense. If you borrow money to cover the total cost of attendance, you’ll end up repaying more than you initially borrowed because of interest charges — what lenders charge you in exchange for lending you money.    When dealing with student loans, it’s important to understand how student loan interest rates affect your repayment and how your extra payments are applied to your debt.   

How Student Loan Interest Rates Affect Your Loan Balance

Student loan interest rates can cause your loan balance to grow over time. The higher the rate, the more interest that accrues.    For example, if you took out $30,000 in student loans and qualified for a 10-year loan at 4% interest, you’d pay $6,448 in interest charges on top of the $30,000 you borrowed.    But if you qualified for a $30,000 loan at 5% interest — a difference of just 1% — you’d pay $8,184 in interest charges. The extra percentage point would cause you to pay over $1,700 more in interest charges.    However, you can cut down on interest payments by paying off your debt ahead of schedule. When you pay off your loans early, less interest accrues over your loan's life, allowing you to save money.   

The Difference Between Principal and Interest Payments

When you enter into repayment, your loan payments cover two different aspects: 
    • Interest: Interest that has accrued to date
    • Principal: The original loan amount
  When you make a payment, lenders typically apply the payment to any fees first, such as late fees or returned payment fees, then to interest charges. If any money is left over, they will apply the excess to the principal balance.   

Education Loan Finance Student Loan Repayment Options

If you take out private student loans from ELFI*, you can choose from the following repayment options: 
    • Immediate repayment: You make payments toward the principal and interest right after disbursement
      • Best for: You’re working while in school and can afford the payments. You want to pay the least amount of interest possible. 
    • Interest only: While you’re in school, you make payments that only cover the interest that accrues on the loan. 
      • Best for: You can’t afford to make full payments, but you want to minimize interest charges. You’re working part-time or have some income while in school. 
    • Partial payment: With partial payments, you make a flat-rate payment — typically $25 — while you’re in school. 
      • Best for: Money is tight while you’re in school, but you want to chip away at some of the interest that accrues. 
    • Fully deferred: If you opt for fully deferred repayment, you don’t make any payments at all while you’re in school. This is the most expensive repayment option, as more interest accrues over the life of the loan. 
      • Best for: You are in a rigorous academic program and need to completely focus on your studies, so you don’t want to make any payments while in school. 
  Use the private student loan calculator to see what your payment would be and how much you’d repay over the life of the loan under each repayment plan.*   

Student Loan Repayment Strategies to Pay Off Your Debt Faster

Once you graduate, there are ways to accelerate your debt repayment and reduce the amount of interest that accrues.   

1. Make Extra Payments

If you want to pay off your debt faster and are thinking about different student loan repayment strategies, consider increasing your minimum monthly payments.    More of your payment will go toward the principal each month, reducing how much you’ll pay in interest and allowing you to pay off the debt ahead of schedule.    For example, if you had $30,000 in student loans at 5% interest and a 10-year repayment term, your monthly payment would be $318 per month. If you only made the minimum payments, you’d repay a total of $38,192 by the end of your loan term.    If you increase your payments to $368 per month — an addition of just $50 per month — you’d pay off your loans 20 months early. And, you’d repay just $36,731. By adjusting your monthly payment, you’d save $1,461.   

2. Use the Debt Avalanche or Debt Snowball Methods

If you have multiple student loans, consider using either the debt avalanche or debt snowball method to tackle your debt.    With the debt avalanche method, you make extra payments toward the loan with the highest interest rate.    With the debt snowball, you target the debt with the lowest balance first.    Which is best for you? It depends on your goals and personality. Learn more in our breakdown of the debt snowball and debt avalanche method repayment strategies  

3. Refinance Your Debt

Student loan interest rates have a big impact on your overall repayment. By refinancing your student loans,* you can qualify for a lower interest rate so more of your monthly payment goes toward the principal. Over time, refinancing can help you save a significant amount of money.   

The Bottom Line

By understanding how payments work and how student loan interest rates affect your total repayment, you can pick a repayment plan that works for you.    If you still have questions, ELFI’s Personal Loan Advisors can walk you through the loan application process and answer any questions you have.*  
  *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.