7 Programs, Sites, and Organizations Helping to Cut Down Student Loan Debt

What tallies up to about $1.5 trillion and has surpassed the United States’ total credit card debt by over $600 billion? Student loan debt.

Spread out among over 44 million borrowers, student loan debt has become the second highest consumer debt category, falling only behind mortgage debt. The average 2016 graduate has over $35,000 in debt — which is up six percent from last year.

In 2012, 66 percent of graduates from public colleges had some sort of student loan debt. That number goes up to 75 percent when you’re talking about private, nonprofit college graduates. Finally, 88 percent of graduates from for-profit colleges had loan debts after they finished school. Not only that, but considering several years have passed since these numbers were recorded, it’s safe to say they have probably increased significantly.

To top it all off, in 2017, the average borrower ages 20 to 30 pays over $350 a month in hopes of alleviating his or her student loan debt.

For example, let’s say you live in New Hampshire — the state with the highest average student loan debt per student. You’re trying to pay off your student loans by working full time at a place where you make minimum wage, which is only $7.25 per hour. In doing this, you’d be spending more than 30 percent of your monthly paycheck to pay off your student loan debt, provided you owe around the average of $350 each month. This would leave you with only around $800 for other bills and expenses.

The above situation may be hypothetical, but many students and graduates around the United States are put in similar predicaments as they begin to try to pay off their student loan debt. In addition, student loan debt is such a big monster that it not only scares many people away from attending college, but it also makes it impossible for some people to pursue any type of higher education.

Here are 7 organizations and companies who are trying to cut-down on student loan debt in the United States in one way or another:

1. New York State:

The New York Legislature passed The Excelsior Scholarship, a “free tuition” program targeted towards helping the middle class, on Friday, April 7. Undergraduate students who attend a State University of New York (SUNY) or a City University of New York (CUNY) school, and whose families’ income is $100,000 or less per year, are eligible for the scholarship.

This is how it works: After financial aid and other scholarships are factored in, the Excelsior covers the rest of the tuition fee. However, the Excelsior does not cover room-and-board, which sometimes accounts for more of the total collegiate cost than does tuition.

On the surface, the Excelsior looks to alleviate the immense amounts of debt that face New York State students as they pursue public higher education. By focusing on the middle class, the scholarship helps a group of Americans that often feels neglected by their government.

Nonetheless, the Excelsior’s positive impact on low-income students or students who must take time off from school for personal reasons is limited. It is undoubtedly a step in the right direction, but it is not a be-all, end-all solution.

2. Student Loan Hero:

Student Loan Hero is a program that helps borrowers organize, understand, manage, and ultimately, repay their student loans.

Through Student Loan Hero, you can put all of your loans — both private and federal — in the same place. You can also get a loan summary and a financial analysis, create a customizable, personalized repayment plan, and seek general advice on your payment options.

Student Loan Hero looks to help borrowers repay their loans in the clearest, most efficient way possible. Other student loan servicers include: Nelnet and Navient.

3. Student loan forgiveness:

The federal government will forgive, cancel, or discharge student loans under certain circumstances. Some of these circumstances include: school closure, death, permanent disability, false certification of student eligibility for loans, and unpaid refunds.

In addition, the Public Service Loan Forgiveness 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.”

Qualifying employment includes: government organizations at any level, not-for-profit organizations that are tax-exempt under Section 501(c)(3) of the Internal Revenue Code, and other types of not-for-profit organizations that provide certain types of qualifying services.

4. Income-driven repayment plans:

There are four types of income-driven repayment plans:

  1. The Revised Pay As You Earn Repayment Plan (REPAYE Plan)
  2. The Pay As You Earn Repayment Plan (PAYE Plan)
  3. The Income-Based Repayment Plan (IBR Plan)
  4. The Income-Contingent Repayment Plan (ICR Plan)

The REPAYE Plan requires borrowers to commit around 10 percent of their income to their loan repayment. The PAYE Plan also requires this 10 percent commitment, but never requires more than the 10-year Standard Repayment Plan amount.

If you’re a new borrower, the IBR Plan requires 10 percent of your income go to loan repayment. If you’re not a new borrower, it requires 15 percent of your income go to loan repayment.

Lastly, the ICR Plan requires the lesser of the following go to loan repayment: 20 percent of your income or “what you would pay on a repayment plan with a fixed payment over the course of 12 years, adjusted according to your income.”

Income-driven repayment plans are helping to cut-down on student loans by making it easier for some borrowers to repay their debt.

5. Ivy League financial aid programs:

All Ivy League schools have a special financial aid program that assists low-income students.

The general rule at all of the institutions is that if a student’s family’s income is about $65,000 or less, his or her parents are not expected to contribute to the cost of attendance at the school.

Princeton University takes this a step further, and has implemented a rule that states: students from families with incomes of $120,000 or less will have free tuition at the school and families that make $65,000 or less will also have free room and board.

6. 529 Plans:

Most states have 529 Plans, which are savings plans that reduce the burden of paying for higher education by helping families set aside money for future college costs.

Many colleges nationwide accept 529 Plans, and most times, the state in which the plan was opened does not affect students’ choice of school.

7. Fastweb:

Fastweb is a website that gives students easy and quick access to over 1.5 million scholarships. The site also has tabs to help students with their college search, with their financial aid management and planning, and with their career goals.

Know of any other resources for managing student loan debt?

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Elizabeth Hartel

Elizabeth Hartel

Elizabeth hails from New Jersey and studies journalism at Emerson College, where she works for two publications: a lifestyle magazine and a music magazine. In addition to education, she also enjoys writing about health and fitness and pop culture.