Navient (Photo Illustration by Pavlo Gonchar/SOPA Images/LightRocket via Getty Images)
SOPA Images/LightRocket via Getty Images
If you don’t qualify for Navient’s student loan forgiveness, try these options instead.
Here’s what you need to know.
Student loans
If you’ve been following the latest headlines on student loans, you may know that Navient – one of the nation’s largest student loan managers – has agreed to a major student loan deal. As a Navient student borrower, you could get over $1.7 billion in student loan forgiveness. That’s the good news. (Here’s how to qualify for $1.7 billion in student loan forgiveness).
The bad news, however, is that there’s a good chance you won’t qualify. For example, about 66,000 student borrowers out of 45 million borrowers are eligible for the $1.7 billion student loan forgiveness. Another 350,000 student borrowers could be eligible for additional relief of $95 million. This means millions of student borrowers will not be eligible for student loan forgiveness. (Here’s Who Won’t Get Student Loan Forgiveness).
However, there is a silver lining. If you don’t qualify for this student loan forgiveness, there are several other viable options, and here are the actions you should consider.
1. Student Loan Payment Break Can Help You Save Every Month
If you have federal student loans, the good news is that your student loans are still on hold until May 1, 2022. That means no mandatory federal student loan payments, no interest accruals, and no student loan collections in fault. Since March 2020, when Congress passed the CARES Act, student borrowers have had access to this historic student loan relief. (Biden should end student loan relief). The US Department of Education estimates borrowers saved $5 billion a month in student loan interest. Congressional progressives want President Joe Biden to extend student loan relief beyond May. (Will student loan repayments be postponed until 2023?). However, to date, the White House and the Department of Education have signaled that student loan repayments will resume as scheduled in May. (Student loans will restart soon. Here’s how to prepare for repayment).
Shock poll: Student loans will be completely canceled before student loan payments restart in May
2. Consolidate student loans
If you’re overwhelmed by the thought of going back to monthly student loan payments, you’re not alone. Student loan repayment is a lot to manage, especially if you have multiple student loans with different interest rates, student loan balances, and student loan managers. (Biden stops challenging student loan forgiveness after public outcry). Student loan consolidation is a strategy for organizing and streamlining your federal student loans. You can consolidate your current federal student loans into one direct consolidation loan. This new federal student loan will have a student loan balance, student loan interest rate, student loan manager, and monthly payment. It can make your life easier every month. The downside is that you won’t get a lower interest rate. Rather, your interest rate will be equal to a weighted average of your current interest rates, rounded to the nearest 1/8%.
3. Get student loan forgiveness this way
There are several options for obtaining student loan forgiveness, including income-based repayment plans such as IBR, PAYE, REPAYE, and ICR. Check with your student loan officer for details. (If Biden cancels student loans, that will happen next). Alternatively, there are options for student loan forgiveness, such as civil service loan forgiveness. Through this program, you work for a qualified utility or nonprofit employer, make 120 monthly student loan payments, and meet other requirements. The good news is that you can completely forgive your federal student loan. The downside is that it can take 10 years. If you have previous student loan repayments that are not eligible for Public Service Loan Forgiveness, you can complete a limited waiver to count your previous student loan repayments. (Student loans are on hiatus, but here are 6 things to do right now).
4. Refinance student loans to get historically low rates
Student loan refinancing is the best way to get a lower interest rate on your student loans. Student loan refinance rates are currently at historic lows and start at 1.74% for variable interest rates and 1.99% for fixed interest rates.
This student loan refinance calculator shows you how much you can save when you refinance student loans.
For example, let’s say you have $100,000 in student loans, an interest rate of 8%, and a repayment term of 10 years. By refinancing your student loans at an interest rate of 3% and a repayment term of 10 years, for example, you would save $248 per month and $29,720 in total. You can choose a fixed or variable interest rate as well as a repayment period between 5 and 20 years. There are no application fees, origination fees or prepayment penalties if you pay off your student loans early. Plus, you can refinance again in your search for a lower interest rate in the future. To qualify, you’ll need at least a 650 credit score, current employment or a signed job offer, stable income, and a low debt-to-income ratio.
With student loan refinance, you can refinance private or federal student loans, or both. Refinancing private loans is a smart move if you can qualify for a lower interest rate. Refinancing federal loans depends on whether you think you need to access federal benefits such as income-contingent repayment or civil service loan forgiveness. If so, do not refinance federal student loans. If not, you may decide to refinance federal student loans to get a lower interest rate and save money.