Many engineers and executives in the manufacturing and industrial world command competitive salaries. But they also accrued significant student loan debt to get where they are today.
Fortunately, there are several programs that can make student loan debt more manageable. Whether you want to ease the burden of monthly payments or simply pay off your loans as fast as possible, read on for five approaches that can help.
1. Switch to an income-driven repayment plan
If the monthly payments on your federal loans are sky-high, you may benefit from an income-driven repayment plan, such as Income-Based Repayment (IBR).
These plans cap your monthly payments at 10 to 20 percent of your annual income, depending on the specific plan. As government-sponsored programs, they only apply to federal student loans such as Direct Loans.
If you choose income-driven repayment, you’ll extend your loan repayment term to 20 to 25 years. After consistent, on-time payments, any remaining balance is forgiven at the end of your term.
However, you should note that this forgiven balance will be treated as taxable income. Plus, extending your repayment plan means you’ll pay a lot more in interest in the long run.
Income-driven repayment is most useful for borrowers who can’t afford their monthly payments. It’s also helpful for anyone working toward Public Service Loan Forgiveness (PSLF), which forgives student loan debt after 10 years of payments as an employee of a qualifying public service organization.
While an income-driven plan eases the burden in the present, it costs you a lot more in interest overall. Consider your options carefully before moving away from the standard 10-year repayment plan.
2. Refinance your student loans
Refinancing means combining one or all of your private and/or federal loans into one new loan with a private lender, such as SoFi or CommonBond. If your new loan comes with a lower interest rate, you could pay your student debt off faster and save thousands of dollars in interest.
Engineers and executives in the manufacturing world tend to be excellent candidates for student loan refinancing. Lenders look at your credit score and income before determining an offer. Because engineers typically have higher incomes, they often qualify for attractive loan terms.
If you have strong credit and a stable salary, you could get a much lower interest rate than the ones you have now. Plus, refinancing simplifies your monthly payments, since you’ll only have to pay back one loan servicer.
Just keep in mind that if you do refinance your federal student loans, you give up federal protections such as income-driven repayment and loan forgiveness. Only pursue this option if you are certain you will be able to afford your payments for the rest of the repayment term.
3. Qualify for Public Service Loan Forgiveness (PSLF)
PSLF offers federal loan forgiveness for anyone working in a qualifying organization. Eligibility requirements don’t specify what your job is, but rather where you work. Eligible organizations include the following:
●Government organizations at the federal, state, local, or tribal level
●Non-profits that aren’t 501(c)3-designated but meet other requirements related to public service
●AmeriCorps or the Peace Corps
After 10 years of on-time payments (beginning October 2007), your remaining debt will be forgiven under PSLF. If you’re looking to qualify for PSLF, you’ll need to switch to an income-driven repayment plan; on the Standard Repayment Plan, you’ll pay off your loans in 10 years anyway, so you wouldn’t have any debt left to forgive.
4. Search for employers that offer student loan assistance
With the national student loan debt totaling $1.4 trillion, more and more employers are offering the perk of student loan assistance. If you’re on the job hunt, look for companies that provide student loan assistance as part of their benefits packages.
They might match a certain percentage of your payments as they would a contribution to a 401(k), or they might pay a set amount toward your loan balance each year.
According to a survey by American Student Assistance, 86 percent of young workers would commit to a company for five years if it offered student loan aid. As this demand grows, more employers are likely to heed the call and provide student loan assistance as part of their benefits packages.
5. Research local student loan repayment assistance programs
Beyond federal programs, some states and universities offer student loan repayment assistance. North Dakota, for instance, awards up to $6,000 to engineers through its Science Technology Engineering and Math (STEM) Student Loan Program. Similarly, the Alfond Foundation offers up to $60,000 to STEM professionals working in Maine.
While student loan assistance programs are not as common for engineers as they are for some other occupations, there are a select few around the country. Check with your state and alma mater to see if you could get any help paying off your student loans.
Devise a plan to handle your student loan debt
Whether or not you qualify for any of the above options, you should come up with a plan to tackle your student loan debt. Make a list of all your student loan servicers and monthly payments. Write down your remaining terms and interest rates.
By taking stock of your debt and repayment plans, you can come up with the strategy that works best for you.
Andrew Josuweit is the CEO of Student Loan Hero, a company that combines easy-to-use tools with financial education to help the millions of Americans living with student debt better manage their loans. You can follow Student Loan Hero on Twitter and Facebook for daily tips on how to get control of your student loans and become debt-free.