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The stress of monthly student loan payments, plus other household expenses, can affect employee job performance. But your employees may be able to relieve some of that burden and reduce their monthly student loan payments with various federal repayment options or refinancing.
Repayment plans
Public school teachers with federal student loans may qualify for income-driven repayment options. These repayment plans are based on level of income. So, lower levels of income could mean lower monthly payments.
Refinancing
Another option is refinancing existing loans at lower interest rates. Refinancing may help educators who don’t qualify for federal forgiveness programs, won’t benefit from income-driven repayment options or have private student loans.
Repayment plans vs. refinance
Sarah’s story
Sarah, a second grade teacher, has $37,700 in student loan debt. With a salary of $36,000, Sarah chooses to move from the standard repayment plan to an income-driven repayment plan and saves $220 in monthly payments.
Justin’s story
Justin, a high school guidance counselor, has $105,000 in student loan debt with an 8.25%* interest rate. Justin would not benefit from an income-driven repayment plan. He chooses to refinance at a lower interest rate (3.5%). Due to the lower interest rate, Justin saves $280 in monthly payments.
Which one is best?
Student loan payment reduction options can be confusing to navigate and may work for everyone. As part of its commitment to helping educators plan for a successful financial future, Horace Mann offers free Student Loan Solutions workshops to explain the different programs to your employees. Representatives can also walk them through the application process from start to finish.
For more information on Student Loan Solutions or to schedule a workshop, visit horacemann.com/workshops.
* Average private loan interest rates are typically 9-12%. Citizens refinancing rates are typically 2-8%. https://studentloanhero.com/featured/student-loan-interest-rates-everything-need-know/
These scenarios are hypothetical and for illustrative purposes only. It’s important to note that refinancing a federal student loan will make the borrower ineligible for loan forgiveness programs and could lengthen the repayment period of the loan.
TPA-0052
Two Ways Your Employees Can Lower their Student Loan Payments