Getting a new job means new ways to get rid of student loan debt.
Whenever employment status changes, a student loan review is a good idea. Switching employers can open new doors to student loan forgiveness, and your new business can even help pay off your debts.
Regardless of whether your income goes up or down, there are potential savings opportunities.
Income-Driven Repayment (IDR) plans and a new salary
Obviously, a new salary means changes to your income-driven repayment (IDR) plan. If your salary increases, you should delay IDR changes as much as possible. When you take a cut in your salary, you want the IDR payments to reflect the new position as soon as possible.
Loan servants do not need a new certificate of income when a borrower changes jobs. However, borrowers can immediately request that their income be recalculated if their income drops. Those who occupy poorly paid positions should apply for a recalculation of payments.
Those who earn more money can potentially delay the new salary, which affects payments. The next time you recertify, use your most recent tax return instead of a pay slip for the new job. If your recertification deadline is around the same time you file tax, you will need to certify income first, then file your final tax return. Minor changes in timing could save hundreds of dollars a month for the next year.
Married borrowers should also reconsider their decision to file taxes together or separately.
Career-Specific Student Loans and Public Service Loans (PSLF)
When Public Loans (PSLF) is just a tiny option, submitting Employer Certification Forms (ECF) is essential. Borrowers should file an ECF for their old and new jobs. The Department of Education’s redesigned PSLF Help Tool provides borrowers with the necessary documentation.
If there is even a small chance that an employer would be eligible for PSLF, submitting an ECF is vital. After you leave a job, employer certifications become more difficult over time. It can be difficult to prove legitimate employment long after the employment relationship has ended. Avoid this challenge by completing the ECF on leaving. Once the old employer has been certified, no additional contact with that employer is required if you later apply for PSLF.
Likewise, after a month or two you would like to complete an ECF with your new employer. This step is vital as it is the only way to ensure that you are making progress towards the PSLF. If the new employer is ineligible, or there is a problem with the loans or the repayment plan, an ECF will help identify those problems. If you wait several years before completing an ECF, years of payments may not count towards PSLF because a minor issue cannot be retrospectively resolved.
Finally, remember that PSLF is not the only option for forgiveness. Many professions have job-specific award programs. If you are starting a new job, this is an excellent time to think about new student loan forgiveness opportunities that may be created.
Investigate student loan and retirement benefits
Many employers have student loan benefit programs. These programs can take several forms. One surprising aspect is that many people in your new organization may not be aware of the student loan payment assistance available. Therefore, new employees should ask if there is such a program.
In addition, retirement plan options can also affect student loan strategy. Borrowers who have the chance to benefit from a generous employer match usually want to maximize that benefit. Borrowers may also be able to use retirement contributions to reduce monthly student loan payments or even increase the amount of debt canceled.
In short, new jobs bring new benefits. Student loan borrowers should carefully consider these benefits and consider changing their repayment strategy.
Use your income for better loans
So far, most of the discussion has centered on options for borrowers with federal student loans. However, a new job also means new opportunities for borrowers with private student loans.
As you make more money, your debt to income ratio (DTI) will improve. In the eyes of student loan lenders, a better DTI means less risk. Simply put, more income means the borrower is more likely to pay back their loans.
Borrowers on high-yielding private student loans can potentially improve their interest rates dramatically by refinancing their loans.
The following lenders currently offer the best refinancing rates:
Finally, those with co-signers may be able to use their improved employment status to exempt their co-signer from their loans.