6 Ways to Cancel Student Debt: A Comprehensive Guide

Student loan debt has become an even bigger concern for millions of Americans following the re-introduction of student loan payments and SCOTUS blocking Biden’s forgiveness plans. Millions of borrowers have again become burdened with huge levels of financial stress in the midst of what some are calling a global financial crisis. 

However, there are several strategies available to help alleviate the weight of student debt. In this article, we will explore six effective ways to cancel student debt, providing borrowers with actionable steps to help them regain financial freedom.

1. See if you qualify for forgiveness (for public service workers):

One of the most beneficial options for borrowers with federal student loans are loan forgiveness programs. Public service workers, such as teachers, nurses, and government employees, may be eligible for Public Service Loan Forgiveness (PSLF). To determine your eligibility, the Department of Education has clear guidelines on how to qualify for PSLF. By completing the necessary service and fulfilling the program's obligations, borrowers can have their remaining student debt canceled.

2. Make sure you're on the best possible federal repayment plan:

The U.S. federal government offers various repayment plans, each designed to accommodate different financial situations. Borrowers can assess their options and select the most suitable one. But this is often a daunting task for borrowers, especially with repayments looming. 

Payitoff Save helps borrowers save an average of $240 per month on their student loan repayments. Better yet, this is a whitelabel, no-code product which allows product leaders in fintechs, financial institutions and financial wellness providers to get this into production for their customers in an afternoon. By helping your customers to leverage these plans, you can help them to manage their student debt more effectively and potentially qualify for loan forgiveness after a designated period.

Check out a sample Payitoff Save experience

3. Prioritize principal payments to reduce interest:

When borrowers are making extra payments towards their student loans, it is crucial that they are allocated towards the principal amount owed. This can significantly reduce the total interest paid over the life of the loan. It’s important to communicate with loan servicers that you want these payments to be made against the principal amount owed since by default they will go towards the interest.

4. Create a comprehensive repayment plan:

Developing a clear and structured repayment plan is essential for effectively managing student debt. Start by analyzing income, expenses, and financial goals. Establish a budget that prioritizes loan payments while taking into account essential expenses. 

Identify areas where you can reduce spending, such as subscription services or dining out, and allocate those savings towards your student loan payments. By sticking to a well-defined plan, borrowers can accelerate their debt repayment journey substantially.

5. Explore employer contributions:

Some employers recognize the burden of student loan debt and offer assistance programs to their employees. The Secure Act, passed in 2019, allows employers to contribute up to $5,250 per year towards their employees' student loans on a tax-free basis. Check with your employer to see if they provide such benefits and take advantage of this opportunity to reduce your debt more rapidly.

6. Consider refinancing private student loans:

If you have private student loans, exploring refinancing options can be advantageous. Refinancing involves obtaining a new loan with better terms and interest rates to replace your existing loan(s). By refinancing, borrowers may be able to secure a lower interest rate, decrease their monthly payments, or adjust the loan term to align with financial goals. Carefully assess the terms and conditions of refinancing offers to ensure they align with your needs and financial situation.

The weight of student loan debt can be overwhelming, but there are several effective strategies for borrowers to cancel or manage student debt more efficiently. 

About Payitoff

Payitoff helps banks, financial wellness providers and fintechs to help their customers achieve better debt outcomes. Payitoff’s borrower experience can be embedded directly into apps and you can watch as customers link their accounts, receive optimized insights, and take money-saving actions. Customize the experience by introducing financial products and ways to help them invest and save for retirement.