If you answered yes, then pack your bags and make way to Niagara Falls New York side. Marketwatch.com shares that young people who are can take advantage of the offer to stay in the place in exchange for $7,000 subsidy on student loan saddled with debt payment. The borrowers would need to stay for about two years to get the fund.
This is an economical move for the place because data has shown that their population is on a decline while the Canada side is increasing. And latching on to the popular student loan topic, they intend to lure in young consumers who are just starting out to try the place and hopefully stay and have families in the area.
This will no doubt be seen as an investment which means that it will come out of taxpayers money. There is no amount of how much this program would cost but some consumers are looking at some of the government’s programs calculating how much the repayment plans are costing the taxpayer every time tax season comes.
One of the more popular repayment plans is the Pay As You Earn (PAYE) program after President Obama expanded the mechanics to benefit more student loan borrowers. PAYE will now compute for just 10% of the discretionary income instead of 15%. WSJ.com reports that this will cost the government $14 billion a year for the program.
With the new generation getting more and more indebted under student loans, it is now wonder that the lure of student loan payment support is a great come on for a lot of components of society. Lenders, towns, states and even jobs are using the debt to get young people in different places. Just like the Public Service Loan Forgiveness program which aims to drive young and promising talent over to the public sector in exchange for a forgiveness promise on the student loan payment.
Getting in line with student loan payment
Once you get into repayment, you need to understand how to keep in line to prevent stepping out into delinquency and default. Once you get into these problem areas, there are still tools that you need to keep in mind that can still pull you back and your student loan payment into current status and continue with the payment.
- Making the most out of a grace period. Federal student loan payment is not due while you are in school. You get to focus on your studies while your debts silently stay under the radar where some accrue interest payment but they are not required to be paid back. The best thing to do at this point is study really hard and if possible, make in-school interest payment on unsubsidized student loans which should not cost you more than a new pair of shoes. Once you separate from your school usually through graduation or if you fall below half time student status, the government still gives you a grace period before repayment. It can be anywhere from six months for most Direct student loans to nine months for Perkins student loan payment. While you are in grace period, your loan servicers will send you details about your debt and you need to consolidate all the data so you know all your loans that are soon becoming due. It is ideal to know how much the payment are before you go into the years of paying down debt.
- Understanding your repayment plans. Once you already know how much your payments are, your next step is to look at your repayment plans especially for federal student loans. Private lenders do not offer the same breadth of choices compared to the government. According to ED.gov, there are about seven different student loan payment options for borrowers to choose from.The default plan is the Standard Repayment Plan where payments are spread out into ten years. This has the highest monthly payment amount but the lowest interest payment over the course of repayment. There are other payments such as the Pay As You Earn where the monthly amount is computed on just a percentage of your discretionary income. These types of student loan payment plans are best for borrowers struggling with their finances.
- Building your emergency fund. As you go through your student loan payment and find that you can make extra payments to pay off the debt faster, think twice before sending that check over to your loan servicer. This is because it is better to build up your emergency fund first to protect you from falling into further debt in the future when you hit a financial roadblock. If your refrigerator breaks down and you do not have any emergency fund to cover a new one, chances are you will be using your credit card which is essentially a loan with skyrocket interest rates.
- Know how to postpone payments. This usually refers to deferment and forbearance and you need to understand the difference between the two to know which can best apply to your situation. Between the two options, deferment is better because the federal government can still shoulder the interest payment on subsidized student loans. So this makes it more ideal for long term financial hardship. But forbearance is best used for short term need because interest payment will accrue on all the loans while the account are enrolled under the program.
How about private student loans
Student loan payment on private student loans is a lot harder compared to federal student loans. This is because there are less repayment plans that borrowers can choose from. Forbes.com do share how some private student lenders are starting to look at payment modifications to help the borrowers who are struggling with repayment.
But there are really some student loan payments scenarios that are hard to meet that is why even Huffingtonpost.com mentioned the idea that there are borrowers who wait for default on their student loan payment and offer a settlement with the lender while some hope against hope that the loan goes past the statue of limitation. This is not an ideal solution to the student loan payment problem.
Defaulting on your student loans would mean your credit score would take a hit. As it plummets down, your future options for financial tools becomes limited. Lenders would be hesitant to approve mortgage loan application under your name because of your credit history. If approved, you might be looking at high interest rates to compensate for a big risk the lenders are taking on the loan.
Consolidate student loans
Consolidating your student loan payment makes the job a little easier because you the only have to manage a smaller if not one student loan account. But as you consider this options, think through the advantages and disadvantages of both loan consolidation for private student loans as well as federal student loans.
This is sometimes too much work for borrowers who are busy holding a steady job that is why some prefer to work with consolidation company for the expertise. It is ideal to read through student loan consolidation reviews to help zero in not only on the legitimate companies but also those that will be a great fit for your need.
Whatever your decision is, your game plan to meet your student loan payment must be flexible enough to compensate for unexpected challenges along the way.