The biggest financial problem facing the youth of today is student loan debt. It’s 2018 and Americans collectively owe $1.5 trillion in student loan debt. That’s way more than on auto loans and credit cards combined.
While the statistic is quite alarming, we must not forget that education is one factor in which you can increase your lifetime income. So, if you have a student loan debt, make sure you can find a way to pay it off best way you can.
Need help? Read on to know your options.
Organizing Your Student Loan Debt
Getting into debt doesn’t mean it’s the end of all the fun in the world. Sure it can make you feel like you’re slaving your bum off, but the best thing to do at this point in time is to face your student loan debt as early as now.
Start by planning how you can it all off. This can be done during the grace period after graduating, which many federal loans do not require payment. If you’ve been paying for several years, however, you can still make better plans.
Calculate How Much You Owe
Do you have any idea how much debt you are in? This is the first thing you should know if you’re planning to pay off student loans fast. Make a list that includes important data such as due dates, monthly payments, interest rates, and your balance.
Having a spreadsheet that lists all your loan data is a helpful practice so that you’re constantly reminded of your goals. Sure, it can scary to look at, but remember that climbing a mountain won’t be possible without seeing it first. A student loan payoff calculator will make this easier.
Getting a full view of your numbers can help ease your mind off things. The total amount you have to pay off may seem impossible to come up, but by having a spreadsheet, you can find a way to make payments more manageable. And remember that your balance reduces every payment, so you’re heading toward the right path.
In your spreadsheet, don’t forget to add a column that lists the payments you’ve made instead of focusing so much on how much you’ve yet to pay in total.
Managing Your Resources
The details in your spreadsheet should give you a rough idea if you can manage to make monthly payments or not. Ask yourself: is your salary enough to pay for your debt and at the same time still provide for your necessities each month? If your answer is no, you have two options:
- Reduce your monthly payments with refinancing or loan assistance
- Find a way to earn money and cut other expenses
It is important to remember at this point that you do not want to stop making payments no matter what happens. Make sure that you pay on time too. Loan payments made on time are essential to building your credit history.
If you cannot afford to pay just yet, we’ll discuss more on that below.
Making Your Student Loans Manageable
Here’s a formula to manage your resources: your total debts and housing payment should not be more than 40% of your monthly income before tax. That being said, we should acknowledge the fact that the 40% debt to income ratio is hard to achieve given a lot of fresh graduates still have entry-level wages. Ideally, however, you should not go over the 40% mark.
If you manage to achieve a debt to income ratio of not more than 40% though, your financial health will vastly improve and you will find yourself having more money to spend on your basic needs and other things. You’re also likely to acquire savings if you wish to buy expensive things, or put money in the bank for savings or investments.
Adjusting to Monthly Payments
The reality for most people is that debt and housing make up more than 50% of income especially for younger people. It’s possible to survive if you are in this situation, but you’ll have to live with little or no money to spend or save, and your finances are easily derailed by the sudden loss of income or unexpected expenses.
If you’re a lawyer, doctor, or a professional with a high-paying and stable job, a 40% cut for housing or loans won’t be a problem. On the other hand, those who don’t have a six-figure income need to tread lightly on their expenses and seek ways to increase income. There’s also the option of refinancing and other federal payment options to reduce the amount of money being paid monthly.
Creating a Payment Plan for Student Loans
You should be able to come up with a decision whether to manage multiple student loans or consolidate them into a single but bigger loan. Considering your balances are still sky high, you should make a point to determine what is the best way to pay off your debt in accordance with your budget.
When it comes to consolidation, it can make paying off your loans easier since you only have one or two payments instead of a whole lot. Consolidating loans can also increase the likelihood of lower interest rates.
Should you choose to still make multiple payments each month, it’s important that organize your due dates. It’s a good thing that lenders are willing to adjust due dates if you talk to them. An advice is that you should arrange for all your due dates into one, or split them into two dates. For example, half of them can be paid on the 15th and the rest on the 30th of each month.
It would do you good if you can afford to make larger payments to avoid penalties and so you can reduce your balance faster. This will help you save money on interest and you get to have the convenience of completing to pay off your loans faster. If the interest rate for one or several loans is higher than 7%, make it a point to pay them earlier.
Payment Reduction on Student Loans
For those with a combined debt and housing payments of more than 40% or those who cannot afford to make loan payments, exploring other options to reduce monthly low payments is essential in order to make your cash flow more manageable.
Federal Loan Assistance Programs
There are several benefits you can get from federal student loans if you want to reduce your monthly payments. One of them is deferment, a repayment plan based on your income and forgiveness in special instances.
Forbearance or Pause Payments with Deferment
If you have no means to make loan payments as of the moment, your two options are deferment and forbearance. These will temporarily suspend your loan payments without affecting your credit score. Ask your service provider if these programs are available, but remember that interest may continue to accumulate on your loans. However, they allow for more time to find other means to repay your loans.
Repayments Based on Income
If you have a job but find yourself spending too much on repayments, there are many federal student loan payment options that can potentially reduce the cost of your monthly payments. For example, if you are granted with an income-based repayment plan, the monthly amount can be reduced for up to 10%.
This option, however, comes with a caveat. Income-based repayments can potentially increase your interest rates since your reduced payments do not cover principal but only accruing interest. Still, there is the option of student loan forgiveness under the income-based repayment plan. If you are granted an IBR plan, the student loans of those who work in non-profit organizations or a qualifying public sector may be forgiven in 10 years, while other professions are given 20 years.
As mentioned, consolidating loans can reduce monthly payments and interest rate. However, it’s main benefit is that all your due dates and balances are combined.
Student Loan Refinancing
For those who have private student loan debts or federal loans with high-interest rates, refinancing may be the option to reduce your monthly payment amount, which will eventually help you save money.
Qualifications to get the best student loan refinance rates include a stable job and good credit standing. In some cases, a creditworthy co-signer is enough.
When we say refinancing, you’re actually loaning a huge sum from another company so that you can pay off all your other loans. You are given the option to decide how long repayments will take, which will reduce your monthly payment. However, it comes with a bigger interest rate.
Fortunately, you can now find refinancing options easily, thanks to the internet where comparison websites are found. These websites can help you what company is fully capable of refinancing. For example, the website Credible can tell you if you qualify for a specific refinancing company in less than two minutes. These websites also have information on interest rates, which is a good thing so you can prepare for it before actually being granted of a new loan.
Other refinancing options include Earnest and SoFi, which are lenders that offer their services online. The approval process of these companies does not entirely depend on your credit score.
Early Payment for Student Loans
It’s only natural that you’d want your student loans to be done the soonest you can, but it may not be the best option. It has benefits for sure, but it may not be always the best option.
Pros of Early Payments
When you’re an early payer, you get to be free of debt faster and you’ll pay less on interests. This is true for most types of loans. People who pay on time or early get to have the advantage since a fact on loans is that the more you delay, the more your interest rates go up.
Cons of Early Payments
It’s almost entirely good if you make your payments early, but this only benefits people who have a lot of money to spare. Remember that there are other bills as well, and if you don’t earn so much, paying your loans early will turn out bad since you have basically nothing left to spend on food and utility bills.
The money you use to make early payments on student loans is:
- The money you cannot save for a big expenditure
- The money you cannot save should an accident happen or if you suddenly lose your job
- The money you cannot save to invest in the stock market
If the opportunity comes that you think you can pay down your debts early, hold your horses first. Check the interest rates of the loans you’re paying. It’s always better to earn interest than paying it for a lot of people, but if you have low interest rates, you get to have low incentives to repay debt or save as well. It’s better to borrow at low interest rates and invest in high-interest rates.
On a personal note, the best reason why you shouldn’t make early payments is to have extra cash on hand. It’s better to have that spare amount in case something unexpected happens. Let’s say you or someone close gets into an accident, you get sick, lost your job, or need to pay something else, which if you do not do could affect the quality of your line.
Remember that student loans are in no way similar to credit lines. If you send the money, you won’t be able to get it or borrow it back should something unexpected happen.
You may not find the reason or make the sense out of it especially if you have pending payments with high interests, but it’s a fact that hanging onto cash has benefits. Having cash on hand gives you the liberty of funding something important in case of emergency. Having cash also means that you get to take advantage of opportunities, such as funding or investing on a business venture or other personal reasons that may help you carry out your numerous goals.
Yes, you have student loans, but remember that you’re young too. You have the capability to work more and make decisions. If that decision turns out to be not too smart, you still have all the time in the world to correct it. The important thing is to have that willingness to pay off your student loans because if there’s a will, there’s always going to be a way.
Pros and Cons of Extending the Term When Refinancing Student Loans
As mentioned refinancing your student loans means that you seek the help of another lender so you can pay off your student loans in your own terms.
These terms are mostly defined by reviewing your credit score, credit reports, income, and other factors. Getting a new private loan will give you a new interest rate and potentially a new period of time for the loan to be rapid. For example, your 10-year term federal student loans can be refinanced so that it can be consolidated into one loan payable for a period of 20 years.
If you have been granted an extension of the term for your student loan when you refinance, remember that your decision should come from a careful assessment of several factors.
Pros of Student Loan Term Extension
Reduced Cost on Monthly Payments
Getting an extension means you get to have lower monthly payments. If your standard payment plan isn’t exactly practical for your current situation, extending the long term to a longer period will help you manage your finances better.
Better Career Flexibility
With a longer term, you’ll have the opportunity to make changes in your career path so you can come up with the right amount to pay off your debt. For example, if you feel that your current job will not help you come up with the amount for repayments, you still have time to look for another job that will offer you a more lucrative salary.
Cons of Student Loan Term Extension
Higher Interest Payments
Since you will be given a longer period of time to pay off the borrowed sum, you will pay more in interest over the life of the loan. The same is still true even if you’ve managed to get your interest rate lower.
Longer Time in Debt
Extending the term of your loan, unfortunately, means that you’ll be in debt for a much longer time. You may not see its effects for now, but if you’re thinking of your financial future, this is an important point to think about.
Deciding for the Best Option
In the process of deciding whether you should take an extension of terms for your student loan, think about your capacity to make repayments each month and compare this to the amount you will pay in interest over time. If you’ve managed to lower your monthly payments, there’s a chance you’re provided with better opportunities in the present. However, you’ll have to be in debt for a much longer time and pay more the longer you are in debt.
If you flip the coin, yes you’ll be free of debt sooner, but this could affect your monthly budget. However, you are guaranteed that you’ll pay less in interest.
So, should you apply for an extension or not? The decision is up to you, to be honest. It’s all a matter of managing your financial responsibilities.
Tips to Manage Your Finances
Learn How to Budget
You may think that you don’t have a lot of expenses, but adulthood is a cocktail of responsibilities, and those responsibilities often cost a lot of money. This in mind, it’s always a good idea to learn how to budget so you can be better at managing your money in the future.
Start with determining your monthly expenses. How much do you spend each month? List down the things that you have to pay each month, which includes food, utility bills, travel expenses, etc. Provide an allotment for each item and try your hardest to stick to it.
If you several credit cards, check your bill to see what you commonly spend on for the last two to three months, then split your transactions into different categories. An example would be:
Each item should have spending goal and the total should no go over the available amount you’re allowed to spend.
It’s also a smart idea to download an app that can help you budget. Some people find it difficult to budget without assistance, so if you can’t afford a financial advisor, a budgeting app should help you carry out this task for now.
Save as Much as You Can
Start by setting aside an amount for an emergency fund. The idea is to have a reserve in case an emergency happens. Make it to a point where you can save at least three to six months worth of living costs. This is not an easy task, but here are some ideas to fund it:
- Come up with a fixed amount on how much you spend each month. If your income goes over these expenses, save the surplus in the emergency fund.
- Try to save money by adding a percentage of every paycheck to your funds instead of settling for a fixed amount. The idea is to contribute more if you earn more, and contribute less if you earn less. This is a great idea for those whose income is fluctuating constantly.
Remember that you are saving for your emergency fund, so use the money for these reasons only. Do not let your impulses take control of your life. Differentiate the needs from the wants and don’t be blinded by items on sale, which you don’t really need.
Create an Additional Income Source
To reach your financial goals faster, it always better to earn more than trying to spend less. In addition to your main job, get a side job if you can so you can earn money than you ever could as an employee.
A lot of people now have turned to freelancing or work second jobs. The good thing is that it’s possible to earn money from home by getting online. You can start selling arts and crafts, or maybe provide services to companies looking for online freelancers or start taking surveys for money.
A college degree has become a necessity for many people, but along with that is the high cost of living. This is the reason why a lot of people have to take out student loans, which can be downright scary and overwhelming.
Knowing what you’re getting into is the key to be able to come up with the right repayment plan. From the moment you graduate, you must have the full understanding that you have acquired a student loan that can be difficult to pay back. Armed with your degree and the willingness to earn, you can start drafting a plan to guide you with your decision making. If you starting to get lost in the process, you can always refer to this article.
That being said, paying off student loans is easier said than done, with proper guidance and the assistance from the right people, however, you can and you will be able to repay it.
With more people in college ever before, there is a record number of students taking out debt to pay for their education. In fact, 70% of students in the United States have student loan debt when they graduate college.
Considering that recent graduates are usually stuck with entry-level jobs or no job at all, paying off student loans is often a grueling task. No matter your situation, there are steps you can take to pay off your student loans fast.
Paying off your student loans quickly will not only save you money, but also take some stress out of your life. To help you pay off your student loans fast, we have compiled a list of questions to help you out:
The Process Behind Paying Off Student Loans
Apart from the six-month grace period, paying off a student loan doesn’t vary much from a traditional loan. When you take out a loan, you’ll be placed on a repayment plan that lasts anywhere from 10 to 25 years. The longer the plan, the more you will end up paying in interest. And just because you sign up for a particular repayment period, doesn’t mean you can’t pay off your loan quicker.
The below questions will help you understand the process behind paying off student loans.
How long does it take to pay off student loans?
The amount of time depends on your monthly payment. Even though many students get a 10-year repayment plan, the average borrower takes around 20 years to pay off their loan.
How long do you have to pay off student loans?
With a standard repayment plan, you are put on a path to pay off your loans in ten years. There is also an extended repayment plan where you get up to 25 years to pay off your loans.
How to pay off student loan debt?
Treat your student loan debt like you would your car payment or mortgage. Moreover, you should create a plan detailing how quick you can pay off the debt and budget in extra payments.
Can you pay off student loans with a credit card?
Yes, however you have to use an intermediary like Plastiq to pay off student loans with a credit card. Keep in mind that the interest on credit cards is much higher than student loans. You could also get creative and look for extra money such as the best bank promotions right now. These extra funds could go towards a paying some of your debt.
How to pay off principal of student loan?
When you make a payment (especially over the minimum), contact your lender to make sure the amount is going to the principal and not towards interest and fees. If you don’t do this, the principal balance may remain stagnant.
When do you have to start paying off student loans?
Since there’s a grace period associated with most student loans, you don’t have to make payments until six months after graduating or dropping out. The whole purpose of the grace period is to give students time to find a job.
What student loans to pay off first?
The general rule of thumb is to pay off the loans with the highest interest rates first. In most cases, these will be private student loans that have variable interest rates.
Is it better to pay off student loans or invest?
It is better to pay off student loans. Investments are risky, and you never know how they will pan out. If you don’t pay off student loans, your credit score might take a hit as well.
How much does paying off student loans affect credit score?
You repayments on debt actually account for 35% of your credit score. When you pay off student loans, you should see a slight jump in your score, depending on your financial history.
What happens if you die before paying off student loans?
That depends on what type of loan it is. The United States government will discharge the outstanding debt on a public loan. When it comes to a private loan, each lender sets forth their own policies.
Who can help me pay off my student loans?
Depending on your area of employment, you may qualify for a student loan program that will help you pay back a portion of your debt. While it might be a stretch, family may be willing to step in and help as well.
Can you pay off student loans while still in school?
Yes, you can definitely pay off student loans while you are still in school. Paying just a small amount on your loans while in school can drastically reduce the long-term cost. You can also sell textbook back for some extra cash online.
How to pay off subsidized student loans
When you get a subsidized loan, you pay make the payment to the loan servicer, not the United States government. To learn more about how repayment works, you should contact your servicer directly.
Paying Off Large Amounts of Debt
If you went to a private university or graduate school, there’s a good chance you’re swimming in debt and don’t know how to pull yourself out. In this situation, you really need to reevaluate your expenses, look for alternative sources of income, and create a new budget. Don’t expect to pay off $100,000 in student debt quickly unless you make major changes.
How to pay off 200,000 in student loans?
Consider getting a job that offers a student loan forgiveness program. Those with a qualified employer might be eligible for the Public Service Loan Forgiveness Program which forgives the outstanding debt when you make 120 qualifying payments.
How long to pay off 40,000 student loan?
The depends on the interest rate on the loan and your monthly payment. For example, if you have a $40,000 loan with an 8% interest rate, you could pay it off in 136 months.
How to pay off 100k in student loans fast?
When it comes to paying off a high amount of student debt, increasing your income is a good way to tackle it. If you can’t get a pay increase at your current job, don’t be afraid to job hop.
How to pay off 15,000 in student loans?
Get a side job if you’re main income isn’t sufficient to pay off 15,000 in student loans. With a part-time job paying $15 per hour, you would save up enough to pay off the whole loan in one year.
How to pay off 90,000 student loans?
Depending on your situation, see if you can qualify for a hardship program due to unemployment, disability or maternity leave. If you qualify, the lender will defer your payments and you save money in the meanwhile.
How to pay off 40k in student loans?
Look to your largest assets – your home and car. Could you sell your car for something more affordable and fuel-efficient? When it comes to your house, think of ways to reduce your utilities and cut down on your monthly expenses.
How to pay off 70k in student loans?
Since 70k is a considerably large amount, you’ll have to do more than just make timely payments. Start a side business to really rake in the cash. Not only will you have more flexibility, but you can also keep earning after you pay off the debt.
How to pay off $250,000 in student loan debt?
If you have $250,000 in student loan debt, chance are that you’re a doctor or other highly-qualified professional. Since you won’t earn as much income at the beginning, enroll in a plan that is based on your income and that increases over time.
How to pay off student loans with high interest rates?
The best way to pay off student loans with high interest rates is to refinance them. In fact, you could get an interest rate as low as 4% depending on your credit score and financial history.
Can I pay off my child’s student loan?
Yes, it’s possible to pay off your child’s student loan if you have the lender transfer the debt over to you. Simply giving them the cash to pay off the loan would come with tax penalties.
Will paying off student loans early hurt credit score?
Paying off your student loan early can slightly hurt your credit score because it reduces your credit mix – the diversity of credit you hold. Moreover, the lack of repayment history could also hurt your credit score a little bit.
Can you pay off student loans before you graduate?
Yes, you can pay off student loans before you graduate. While you have to start making payment until after the grace period, you won’t be penalized for paying off the loans before graduating. Starting a side business online while in college can help you pay this faster. Taking an affiliate marketing course would probably be a good first step in this direction.
Grants and Loan Forgiveness Programs
Those who are active members of the military or working in certain fields can receive grants to help them pay off their student loans. In short, a grant is basically free money.
Unlike a loan, you don’t have to pay back a grant. You must, however, meet a number of requirements to be eligible. Before you start trying to pay off your debt in its entirety, see if you might qualify for a loan forgiveness program.
Does the military pay off your student loans?
Yes, the military has a college student loan repayment program that pays up to $65,000. To qualify for this program, you can’t have any military experience before joining or reenlist.
Can you get a grant to pay off student loans?
Yes, you can get a grand to pay off your student loans depending on the field you work in. Some of the most popular grants include the National Institutes of Health and teacher loan forgiveness program.
Can you use GI bill to pay off student loans?
No, you cannot use the GI bill to pay off student loans. While the GI bill will pay for your tuition and the cost of supplies, it won’t pay debts you’ve built up in the past from schooling.
Is paying off student loans tax deductible?
Yes, but only a small portion of your repayment is tax deductible: the interest. You cannot deduct the amount you pay towards interest from your income taxes.
Does the navy pay off student loans?
Yes, but it’s not as easy as it was in 2015 when the Navy Student Loan Repayment Program was enacted. Nowadays, only a small amount of Navy officers are eligible for up to $65,000 of student loan repayment.
Does AmeriCorps pay off student loans?
Yes, AmeriCorps does help pay off student loans if you volunteer with them, but only the interest. Your payments will be temporarily deferred under forbearance while you are volunteering.
Does the Coast Guard pay off student loans?
Yes, the Coast Guard does pay off student loans through their student loan repayment program. Eligible officers can receive up to $30,000 to put towards their existing loans ($10,000 maximum each year).
Paying More than the Minimum Payment or in Full
No matter what type of loan you take out, most financial experts recommend to pay more than the minimum payment each month. When you pay more than the bare minimum, a larger portion goes to the principal amount. Just $20 more per month can make a big impact and cut the time needed to pay off your student debt.
How to pay off student loans early?
Setup an automatic payment each month for more than the minimum amount. You should also consider refinancing your loan, so you could save on the interest rate and pay it off faster.
Can you pay off student loans early?
Yes, nothing is stopping you from paying off student loans early. No student loans penalize you when you make more the minimum payments to pay them off faster.
How to pay off student loan in full?
First, you can use a handy calculator to give you an idea how much you need to spend to pay off the loan. Then, contact the lender directly and advise you plan on paying off the loan in full.
What is the fastest way to pay off student loans?
The fastest way to pay off loans in the make a lump sum payment not too long after you graduate. As time passes, you will end up paying a lot more in interest. Some people use debt consolidation loans to keep interest rates at bay while they make payments.
How to aggressively pay off student loans?
Most importantly, maintain an emergency fund and then start living frugally. Create a new budget from scratch and allocate anything left ever to your student loans.
How to pay off $20,000 in student loans?
To make paying off $20,000 in loans more realistic, you could refinance your debt. Refinancing your student loans give you a shot at a lower interest rate and new repayment plans.
When did Obama pay off student loans?
In 2012, Obama said he paid off his loans 8 years ago – back in 2004. While studying at Harvard, the former president took out over $40,000 in student loans.
Should I pay off student loans before buying a house?
Yes, it is a smart move to pay off student loans before paying debt because taking on a mortgage is a huge commitment. In addition, reducing your debt-to-income ratio can help you get a better interest rate on a mortgage.
Should I use student loans to pay off credit cards?
No, you should not use student loans to pay off credit cards because this will likely violate your student loan agreement. In addition, you can’t discharge student loans during bankruptcy like you can credit card debt.
Will paying off student loans improve credit score?
No, paying off student loans does not necessarily improve your credit score, especially if you’re just left with revolving debt afterwards. However, if you missed payments in the past, paying off your student loan may boost your credit score.
Are there penalties for paying off student loans early?
Unlike with traditional loans, there are no penalties for paying off private and public student loans off early. With that said, you should still contact the lender before paying off a loan in full.
Paying Off Loans Before the Repayment Period Ends
The best way to save money in the long-term is to pay your loan off before the repayment period ends. Why? You can end up saving thousands of dollars throughout the life of the loan. Not only that, but you have one less payment to make every months and are one step closer to living a debt-free live. The below questions will help you decide if you should pay your loan of quickly or not:
How to pay off student loans fast?
Pay more than the minimum amount each month. When you make more than the minimum payment, you will save on interest and pay off the loan faster.
Should I pay off my student loans early?
Yes, you should pay your student loans off early to lower your debt to income ratio and save money on interest. You can then allocate the money spent on interest to a car payment or other bills.
How to pay off student loans in 5 years?
To pay off student loans in 5 years, you need to cut your unnecessary expenses (i.e. fine dining) and recreate your budget factoring in your additional payments each month.
How fast can I pay off my student loan?
It’s possible to pay off your student loan in as little as one year if your income is high enough. You can always make lump sum payments and knock time off your loan.
Why are student loans so hard to pay off?
Recent graduates often times don’t have a stable income or strong amount in savings, so making monthly payments in a huge burden. If you stick to the minimum payment, it takes longer to pay off the loans cause more of your payment is going to interest.
Should I pay off all my student loans at once?
Yes, if you can afford it, paying of all your student loans at once is a good idea and is another step closer to a debt-free live. However, don’t pull from your emergency fund. Make sure to have enough to cover at least six months of expenses.
How to pay off student loans in 2 years?
Create a solid plan and make sure to keep your spending in check. No more fancy meals out or $200 pair of shoes. Once you can control your spending, you should focus on finding ways to supplement your income.
How does paying off student loans works?
When you take out a student loan, you will be placed on a repayment specifying the monthly payment and interest rate. After your graduate, your repayment will become a reoccurring bill each month.
What You Can Use Student Loans For
Money from student loans isn’t a disposable source of income that you can use for anything. In most cases, student loans are only meant for expenses directly related to your school. In addition, you can’t use money from certain tax-advantage savings account to pay off student loan debt. If you’re not sure what you can use your loan money for, take a look at the below questions:
Will student loans pay for off-campus housing?
Yes, student loans will pay for-off campus housing because is a legitimate expense associated with the cost of going to school. In fact, you can actually use less debt when you choose to live off-campus.
Can you use a 529 to pay off student loans?
No, you cannot use money in a 529 to pay off student loans. Money in a 529 plan can only be used for qualified expenses like tuition, books, and living accommodations during school.
Can Coverdell be used to pay off student loans?
No, you can only use a Coverdell education savings account to pay qualified expenses at elementary schools, secondary schools, and universities. This includes tuition, books, tutoring, and other costs associated with schooling.