Save Millions (OK, Thousands) on Your Student Loans. Here's How.

May 15, 2018

Here’s a not-so-fun fact: The amount of student loan debt currently crippling America’s millennial workforce amounts to $1.4 trillion. In fact, this generation is shouldering more student debt than any generation before them. Sadly, we can't say we're all that surprised; after all, a bachelor’s degree continues to replace a high school diploma as one of the basic qualifications for entry-level jobs. Plus, with millennial wages lower than those earned by previous generations at this stage in their careers, the situation seems pretty…well, depressing.

So it sounds like the jig is up. Millennials might as well pack up and, if they haven’t already, move back in with their parents. Forget about ever buying a house! And retirement?! Ha, that’s a funny idea.

OK, let’s pump the brakes here. Is the situation really that dire? Not necessarily. Although the number of people who have defaulted on their student loan payments has doubled over the past four years, all is not lost—yet.

First of all, if you’re a PERA member, you may qualify for your loans to be straight-up forgiven.(Say what?) The Public Service Loan Forgiveness (PSLF) program allows qualifying government and not-for-profit employees to have the balance of their loans forgiven after 120 qualifying payments. (Just in case you weren’t a math major, that’s 10 years.)

If you’re signing up for PSLF, you may want to consider the U.S. Department of Education’s income-driven repayment plans. Smart cookies (like you, naturally) who combine these two programs can save a whole lot of cash. It works something like this: borrowers elect the payment plan with the lowest monthly payment, and a repayment term of 25 years, and then has the remaining balance forgiven after 120 qualifying payments—ultimately, that means they are foregoing payments on over half of the loan balance. An added bonus: the forgiven loan balance is not considered taxable income under the Internal Revenue Code (unlike other types of loan forgiveness programs).

Cha-ching!

But hold up for a second. Before you do anything, make sure you go to StudentAid.gov and read the fine print. You don’t want to plan on having those loans forgiven and then wind up owing more than you expected. And while you're doing your due diligence, keep in mind that not all student loan repayment options you might read about are legit. The Atlantic recently published a "buyer beware" tale of a fake student loan "expert" who was dolling out refinancing information online—the clincher being that this expert didn't actually existIt may sound like something out of a B-rated thriller, but the message at the end of the day is this: Do your research, and ensure that you're getting your information from credible sources (ahem, like The Dime).

In the meantime, remember that saving for retirement and repaying student loans are not mutually exclusive. Sure, you may have to skip the expensive beers (and, upside, the hangovers) or the Uber ride to Red Rocks this summer, but you really don’t want to wait to start saving for retirement until your loans are paid off. That’s because time is way, way more valuable than money.