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12 Game Changers You Probably Didn't Know About Your Student Loans

You aren't doomed.

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1. If you’re taking out private loans, you can negotiate interest rates.

Or, you can at least try. "Interest rates can range from 2.25% all the way to close to 11%," Diana Draper, director of financial aid at Fairfield University, told BuzzFeed. "Federal loan interest rates are dictated by Congress, based on banking standards, but you might have some room for negotiation with private lenders." She recommends looking for rates that are close to prime rate (currently, around 3.25%), finding out if the bank tacks on additional points or interest charges, and making sure you know if that rate is fixed or variable. In order to get the best possible rate, you might have to find a co-signer (usually a parent) with more established credit.

2. The importance of repayment terms should not be underestimated.

Most students focus on the interest rates they're being offered — an important factor, certainly — but Draper urged students to keep repayment terms in mind, especially when signing with a private lender. "This is especially significant if you're going into a career, like teaching, that does require additional schooling but doesn't promise the high salary like, say, medicine or law," she said. "Not all private loans allow you to defer payment, or offer income-based options like federal loans do, and some require repayment in a specific number of years."

3. Loan forgiveness is real, but only through the federal government.

If you're dealing with federal loans, there are allowances for people who meet certain specifications: most commonly, full-time teachers in low-income schools, and those who work in public service jobs. If eligible, and if payments are made on time, loans may be forgiven after 10 years. (For teachers, you may have as much as $17,500 forgiven.) There are other, less common instances in which certain loans might be canceled or discharged — disability, bankruptcy, school closure, for example — but a full list of qualifications is available here. Steer clear of any private debt settlement firms that promise debt forgiveness — especially if they charge a fee.

4. There are other ways for your loan to be forgiven, even if you don’t qualify for those.

You may have heard a rumor that your loans will be forgiven, regardless, after 20 years. It's not universally true, but it is possible. "Currently there are three repayment plans — Income Based Repayment, Income Contingent Repayment, and Pay As You Earn — that allow your [federal] loan to be forgiven after you have made payments for 20 or 25 years, depending on when you took out the loan," wrote Angela Mazzolini, accredited financial counselor and program director of Red to Black at Texas Tech University, in an email to BuzzFeed. These are plans that base your monthly payments on your discretionary income — or, the amount of money you make that is above the national poverty line — but they also require you meet specific guidelines and that you reapply each year. "Just as a note," Mazzolini added, "any debt that is forgiven under one of these plans may be considered taxable income."

5. There isn’t one ideal percentage of your wages that you should be putting toward your loans.

Your individual repayment plan is affected by so many unique variables — how much you're making, how much debt you have, your interest rates, whether these are federal or private loans — that it's impossible to set a certain percentage as a universal ideal. "This really depends on your goals," said Mazzolini. "If your goal is to pay off your student loans as quickly as possible, then you want to put a higher percentage than if you want to use your income to build an emergency fund or a retirement nest egg."

6. And, yes, it is still worth putting money into savings or retirement funds even if you have tens (or hundreds!) of thousands in debt.

Unless you suddenly come into a huge inheritance or win the lottery, it's probably not advisable to use your savings to wipe out your debt. "It's always good to have a cushion; you want some savings," Draper said. "If you come into a windfall and you decide you have X amount you want to pay [toward loans], I would say use it on private loans first. When it comes to federal loans, there are no prepayment penalties, but there are also safeguards in place for if you run into financial crisis in the future. There are fewer allowances with private lenders."

Mazzolini agreed, but offered a suggestion for recent grads: "If you're still in your grace period, pretend you have a student loan payment due and save that money. After your six-month grace period is over and you have your first payment due, you can make a large payment toward the principal."

7. If you pay more than the minimum, you can decide where that money goes — but you have to be explicit.

"You can choose to have any extra amount go toward principal or interest," said Mazzolini, but, for both federal and private loans, you should contact the servicers to make that intention clear — otherwise, anything beyond a minimum payment could be going toward future payments, and therefore not reducing your total cost at all. You can also ensure that the extra money goes toward accounts with the highest balance, or highest interest rate. Mazzolini recommended Powerpay.org as a way to help make that decision. "[It's] a great resource to help you figure out how long it will take you to pay off loans given different scenarios."

8. Taking out additional loans for post-grad work can be worthwhile, depending on projected salary and the repayment terms of your undergrad loans.

This is another decision that is so tied to individual circumstances that it's tough to define a steadfast rule. A discerning approach to take, though, is considering your projected salary — will it be enough to cover all of your loans? — as well as your repayment terms. All federal loans allow you to put off payment for as long as you're enrolled at least part-time in further schooling — although, as Mazzolini noted, "While your undergrad loans will go into deferment, they will still be collecting interest" — but private lenders won't always offer a similar plan. Mazzolini suggested working part-time while studying to offset tuition, or to make at least minimal payments toward the principals of your loans.

9. Debt consolidation is not the same as refinancing.

Refinancing, which Mazzolini said is done with private lenders, involves taking out a new loan at a lower interest rate to pay off your existing loans. This inherently involves consolidation — since you're using one new loan to pay off the others — but you can also consolidate without refinancing through the federal government, which involves taking all federal loans and combining them into one loan with a weighted interest rate.

Consolidation might not be a great option, Draper said, "for people who only have a few years left, [since] it often lengthens the pay period." And the downside of refinancing with a private lender, as Mazzolini noted, is the loss of all benefits inherent in federal loans, i.e., income-driven repayment, deferment (a period of time in which repayment of both interest and principal is delayed), forbearance (reduced or halted payments for up to a year), and forgiveness.

10. If you can’t seem to keep track of all your loans, there is a site that does it for you.

As long as we're talking about federal loans. "If you have ONLY federal student loans, you see them all here," wrote Mazzolini. "If you have private loans, you'll have to contact each lender directly."

11. You aren’t doomed if you can’t afford even your reduced payment plan.

The ultimate goal of lenders and loan servicers is getting their money back, so they're generally happy to work with you to keep you from defaulting. If you're struggling to make already reduced payments, Mazzolini recommended reaching out to the institution you attended. "They want to make sure you don't go into default and will help get you in contact with your loan servicer," she wrote. "If you can't afford the Income Based Repayment, or the Pay As You Earn plans, you might qualify for deferment or a forbearance."

12. If you still have questions, there are a LOT of resources that might answer them.

"The Department of Education, Federal Student Aid, is a great source of reliable, legitimate information," said Draper. "They have a YouTube channel, a strong social media presence, and will even hold office hours on Twitter to answer questions."

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