Student loans can seem like a nightmare. Many Americans struggle everyday to pay back their loans and many can’t make it. In 2010 two-thirds of college seniors carried an average of $25,250 in debt according to the Project on Student Debt. These kids also had the highest unemployment rate in recent history at 9.1%. Overcoming student loan debt may seem impossible with those odds.
However, there is a light at the end of the tunnel. We’ll show you some ways to manage your debt and get your life back on track. You’ll have to decide what the best choice for your current situation is. Here are some suggestions to help you get started:
Loan forgiveness - There are some programs out there that will forgive all or some of your federal student loans if you work in certain fields. Jobs such as public safety, teachers, nurses, and a few others fall into this category. This program discharges any remaining debt after 10 years of full-time employment in public service.
Loan deferment – If you are having trouble paying loans back due to economic hardship, unemployment, military deployment, health problems, or enrollment in school, there are ways to postpone your federal loans. This process is called loan deferment. Deferment lets you temporarily suspend making your student loan payments.
Types of loans & grace periods – It’s imperative that you keep track of the lender, balance, and repayment status of each of your student loans. Different loans have different grace periods, or how long after leaving school before you have to start paying it back. Pay schedules or due dates should also be closely monitored. This will help you avoid any late fees or charges.
Tackle the most expensive loan first – Check to see which loan has the highest interest rate and pay that one off first. The highest-interest method usually gets the debts paid slightly quicker than the debt-snowball method (paying debts with the smallest amount first regardless of interest rates). Compare the interest rates and start on the highest one first. That will leave more money in your pocket when all is said and done.
Extended Payment Plan – Try to request the extended payment option, if possible. This will lengthen the repayment time and could help decrease the amount due each month. Though extended payment plans will cause more interest to accumulate, the interest is tax-deductible within limits. Call your loan provider to see if this is an option.
Income-based Repayment Plan – Some loan providers may have this as an option. You’re monthly payment would be based on the amount of income you are making each month. This plan limits the amount to a specific percentage (depending on the lender). It could help you keep current on your payments. Ask your lender if they provide this type of plan.
Whatever your situation may be, hopefully you’re lender is willing to work with you to repay your student loan debt. Don’t ignore the problems and think they’ll just go away. There can be major consequences with defaulting on a loan. Be advised that student loans are now generally not dischargeable through bankruptcy.
If you or someone you know is having trouble with debt, give us a call. We have certified Credit Counselors available to help get that debt monkey off of your back. If you have any questions about student loans or debt, please leave a comment.
Written by Lauralynn Schueckler · Filed Under Debt, News, Tips
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