What you can learn from 2016 to help you crush student loans in 2017
The New Year is known as a time of new beginnings, and in 2017 hundreds of thousands of student loan borrowers are beginning the year without student debt. That’s right, in 2016, more than 500,000 Navient borrowers paid off their student loans, allowing them to start a new year with a lower debt burden and a stronger financial future.
Paying off student loans is a major milestone, and is the ultimate goal for borrowers. That’s why we asked those who paid off in 2016 to share some of the tips they used to get across the finish line.
Elesea Russo of Fort Sumner, New Mexico, told us that she and her husband worked together to stick to a budget, make payments on time, and pay extra whenever they could.
“I started out slowly. At first, my husband and I were just managing to pay each month’s minimum required payment. We targeted the smallest student loan and paid it off as quickly as possible, moving to the next smallest and so on until we paid off all of our combined student loans.”
At Navient, we offer free tools to help borrowers like Elesea stay on track. Last year, we launched 16 free online resources, including a repayment calculator, interactive videos, a webcast, and a series on personal finance.
We know our customers are often juggling work and family, and student loan repayment may not always be top of mind. So we offer Auto Pay, which helps borrowers like Connie Haag, of Columbus, Ohio, who credits the program with her success and encourages others to enroll:
“I would share with anyone paying on their student loans to sign up for auto payment. This way you cannot forget! It’s the best strategy.”
Connie wasn’t alone in taking advantage of Auto Pay, which helps ensure regular, on-time payments, and could even result in an interest rate deduction. In 2016, a record number of 766,000 Navient loan customers enrolled in Auto Pay, bringing the total rate to nearly 1 in 4 borrowers.
Although customers are eager to pay off their loans, for many, the standard 10-year repayment plan doesn’t make sense for their financial circumstances. That’s where income-driven repayment (IDR) options come in. There are a number of specific options available that can tie a federal student loan borrower’s monthly payment to his or her income. These programs are increasingly popular, with approximately 1 in 4 borrowers and 43 percent of balances serviced by Navient enrolled in an income-driven repayment plan.
Neil Scheible of Buffalo, New York, shared his experience with IDR:
“I wanted to pay off these loans as fast as possible to save money in the long run, but that wasn’t always feasible. Once I began my career and had rent, bills, car payments, and student loan payments to take care of, I needed to find a repayment plan that allowed me to both pay off my student debt and a life worth living. The answer was an income driven repayment plan. I am now able to afford all of my personal expenses as well as pay off my student debt. As I begin to make more money throughout my career, my monthly payment will adjust.”
The last year not only saw success for borrowers, but there were also positive indications about the financial security of young adults more broadly. In our second annual Money Under 35 survey, we found young adults’ financial situations continued to improve, with more reporting better financial health in 2016 than in the year prior.
It’s important to note that the improvements in employment and financial health are concentrated in those who completed their college degree. Degree holders are more likely to be employed, earn higher wages, have a higher credit score, and are more likely to buy a home than those without a degree. Our study showed attending some college isn’t enough — completion is the key for realizing financial benefits down the road. For those in college, it’s important to have a plan to complete your degree and stick with it.
We congratulate those who are starting the new year without student debt, and we pledge to continue to help others achieve the same milestone in 2017 and years to come!
Nikki Lavoie is a spokeswoman at Navient, a student loan servicer helping more than 12 million customers successfully repay their student loans.