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How to Pay Off MBA Student Loans
Updated On January 11, 2022
Editorial Note: This content is based solely on the author's opinions and is not provided, approved, endorsed or reviewed by any financial institution or partner.
If you want to pay off MBA student loans or explore student loan forgiveness, the good news is there are several options. Today, 45 student loan borrowers collectively owe more than $1.6 trillion of student loan debt. On average, MBA graduates can owe approximately $70,000 of student loans.
What’s the best way to pay off MBA student loans? Here are three options:
Student loan refinancing
If you want to pay off student loans fast, then student loan refinancing is your best bet. When you refinance student loans, you get a new student loan at a lower interest rate, which helps you save money and pay off debt faster. Your new student loan is then used to pay off your old student loan. With student loan refinancing, you can lower your monthly payment, choose a fixed or variable interest rate and choose a student loan repayment term from 5 to 20 years. The standard student loan repayment term is 10 years. With a shorter repayment term, you could save significantly on interest. With a longer repayment term, you could lower your monthly payments. You can refinance both your college and MBA student loans together. If you already refinanced your college student loans or MBA student loans, or both, you can refinance again so long as you can get a lower interest rate. There are no fees to refinance student loans, and the student loan refinancing process is easy.
This student loan refinancing calculator shows you how much money you can save on your MBA student loans when you refinance.
Income-driven repayment
You also could place your federal student loans into an income-driven repayment plan. These are plans based on your discretionary income, family size and state of residency. Typically, you pay 10-20% of your discretionary income. Income-driven repayment plans are not available through the federal government for your private student loans, however. Income-driven repayment plans won’t help you pay off student loans faster. However, if you are struggling to make monthly student loan payments, income-driven repayment plans can help you manage your payments. After 20 years (undergraduate loans) or 25 years (graduate loans), you can get student loan forgiveness on your federal student loans. That said, you will owe income tax on the amount of student loan debt is forgiven. It’s also important to remember that your monthly payment will rise as your income rises. So, an income-driven repayment plan may become more expensive than the standard repayment plan if your income after your MBA rises each year.
Student loan forgiveness
If you work for a public service or non-profit employer, you may consider the Public Service Loan Forgiveness program. While most MBA graduates work in the private sector, you may apply for student loan forgiveness if you work in the public sector. Public service forgiveness requires that you work full-time for a qualified employer and make 120 monthly payments while being enrolled in an income-driven plan like REPAYE. Unlike student loan refinancing, public service loan forgiveness does not help you pay off student loans faster. Rather, public service loan forgiveness takes at least 10 years to complete, and you have to fulfill several requirements. Unlike income-driven repayment plans, the good news is that you won’t owe any income tax on the amount of student loan debt forgiven.
Refinance With SoFi
