What student loan borrowers would change if they went back to college

It’s easy to feel regretful about your college years, especially when graduation leaves you with tens of thousands of dollars in student loans. Yet, a recent survey revealed that the majority of student loan borrowers, now in hindsight, would still have pursued their higher education. According to Bankrate’s student loans survey, more than half (59%) of adult respondents with student loans said they still would have attended college but done something differently to curtail how much debt they took on, such as applying for more scholarships (23%), working or working more while they were in school (20%), getting a degree in a different field (19%), attending a cheaper school (17%), going to community college (15%) or doing something else differently (5%). It’s likely that those with a college degree — even if it still costs them years later — found that it opened the door to job opportunities and higher earning potential. According to 2021 U.S. Bureau of Labor Statistics data, adults ages 25 and older with a high school diploma but no college experience earned on average $809 per week, while those with a bachelor’s degree earned on average $1,334 per week (earnings listed are for full-time wage and salary workers). This works out to a $27,300 difference in annual salaries, which is a considerable amount. If you’re one of the millions burdened with student loan debt, here’s what you can do to manage it.

If you have federal student loans

Federal student loan borrowers can still take advantage of the payment and interest freeze that has been in effect for the last two years and recently extended through Aug. 31, 2022. Depending on where you stand financially, you could either make the most of the relief while it lasts or use this time to make a dent in your student debt. If you’re feeling cash-strapped, focus instead on paying your high-priority bills since your student loans aren’t currently collecting interest. If you don’t have enough of an emergency fund set aside, now’s the time to stash cash in a high-yield savings account like the Ally Online Savings Account, which offers an above-average interest rate. For those who have their high-priority bills and emergency fund taken care of, it’s worth making payments on your federal student loans even as the pause remains. With interest also paused at 0%, the payments will be made directly toward your principal so you can chip away at it faster than if you were paying on an interest-accruing balance. Plus, when the forbearance period does end and payments and interest resume, you will then have a smaller balance that will be collecting less interest. Once the payment and interest freeze on federal student loans is up, know that there are still income-driven repayment plans that can help you if you feel like you’re drowning in debt and can’t keep up. These plans recalculate your monthly bill based on any changes in your income, so your student loan payment is reflective of how much you can afford to pay. Two specific plans, Pay As You Earn (PAYE) and Revised Pay As You Earn (REPAYE), will even cap your federal student loan payment at 10% of your discretionary income and after the repayment period ends, any remaining balance is forgiven.

If you have private student loans

Private student loan borrowers may want to consider refinancing to score a lower interest rate than what they are currently paying on their debt. Through refinancing, you can also choose a longer or shorter repayment term, depending on how quickly you want to pay off your loans and how much you can afford in monthly payments. For example, a shorter payment term will help you get rid of your debt faster, but it means making higher payments each month. Lenders like SoFi, CommonBond and Earnest have a wide selection of loan terms and interest rates to choose from. They also charge no application or origination fees, have zero prepayment penalties and offer flexible repayment terms, economic hardship payment options and autopay interest rate reductions. In addition, CommonBond offers a co-signer release option after 24 consecutive on-time monthly payments of the loan’s principal and interest, which acts as an incentive if you need a parent or guardian to co-sign the loan in order to take it out. Earnest also allows applicants with a fair credit score to qualify. If you are thinking about refinancing your private student loans, it’s worth making a move fast. With the recent rise in interest rates — and the promise of more coming — borrowing money will only get more expensive.