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How your job affects your student loan refinancing application
Your salary and career path are two key factors lenders consider.
This is especially true if you’re in a field that leaves graduates with high student debt loads — like law or medicine. Beyond refinancing, where you work can also help you qualify for repayment assistance or forgiveness.
How your job affects your eligibility for student loan refinancing
Refinancing with a private lender can help you get out of debt faster — but only if you can qualify for lower rates, a shorter term or both. Where you work affects your eligibility for refinancing in two main ways:
It determines your salary
Your salary is one of the key factors lenders consider when you apply for student loan refinancing — most lenders have minimum income requirements. Lenders see applicants with a high salary as less of a risk, since you won’t have to spend as much of your income on repayments.
A high salary also means you can afford the higher repayments that come with a shorter loan term. The more you make, the more likely you are to qualify for a deal that gets you out of debt faster.
It helps lenders predict your future ability to repay
Student loan refinancing companies see your career as a strong predictor of your salary. Being in a typically high-earning profession like medicine or law could strengthen your application, even if you aren’t earning a lot right now.
Lenders also look at how long you’ve worked at a job to predict your future ability to repay. If you’re new to your profession, you might appear riskier than someone who’s worked in the same field or for the same employer for more than three years. Some lenders even have length-of-employment requirements, though in some cases you can qualify for refinancing if you’re a recent graduate with a job offer.
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How else can my job help me get out of debt faster?
Refinancing can reduce your repayments by giving you a lower interest rate or shorter term. But where you work can also help you get out of debt faster in other ways.
Federal and state forgiveness programs
Most forgiveness options are incentive programs designed to make public service and nonprofit work more attractive to professionals who could earn more elsewhere. In most cases, you need to work a low-income job in a specific field for a certain number of years before you can qualify. Choosing to work with an eligible employer can help you get out of debt faster by seriously reducing your student debt load.
Here’s how it works for two popular federal loan forgiveness programs:
|Public Service Loan Forgiveness (PSLF)||Teacher Loan Forgiveness|
|Eligible jobs||Any job at a government, 501(c)(3) organization or another nonprofit that serves the public||Teacher at an elementary school, secondary school or educational service agency that serves low-income students|
|Employment requirement||At least 10 years of full-time work or working 30 hours a week with an eligible employer||Work full-time for five consecutive years at an eligible school or educational service agency|
|Forgiveness amount||Full student loan balance after making 120 qualifying repayments||Up to $17,500 for math, science and special education teachers, and up to $5,000 for teachers in other subjects|
Thinking of joining the US armed forces? There are several types of forgiveness options for service members, depending on the circumstances of your service. And many states have forgiveness programs available to certain professions.
Private forgiveness and repayment assistance programs
Your job can also help you qualify for other forgiveness and loan repayment assistance programs (LRAPs) from private organizations — which sometimes forgive both private and federal student loans.
If you have a degree that typically comes with a high level of student debt like law or medicine, your school might even offer forgiveness. Typically, these programs offer anywhere from $10,000 to over $100,000 in forgiveness.
Which careers are most likely to qualify for student loan forgiveness?
You’ll have the most forgiveness and LRAP options if you work in one of the following professions:
- Public service
Student loan repayment benefits through your employer
You don’t necessarily need to be a doctor or lawyer to qualify for loan repayment assistance. Employers have started offering student loan repayment benefits to attract top talent. It’s most common in the tech industry, though you can find companies that offer repayment benefits in a wide range of professions — from retail to publishing.
Usually employers cap benefits at $10,000 — lower than many LRAPs and forgiveness programs. But it can still help you get out of debt faster than you would have otherwise.
Going for a high-paying job or working in a high-paying field can help you qualify for a better deal when you apply for refinancing. But a high salary isn’t always necessary to save on your student loans — working a public service job can help you qualify for forgiveness.
You can learn more about how it all works by checking out our guide to student loan refinancing.
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