There are a lot of college debt holders who wants to get out of student loan repayments. This pushes a lot of borrowers to aggressively pay down student loans as fast as possible. This does not only save them interest payments in the long run but also paves the way for starting early on some life opportunities like getting a house, getting married and having children.
As borrowers tread down this aggressive approach, they sometimes overlook some important funds that puts them in a tight spot down the road. There are borrowers who wants to get out of student loan payments that they put off building their retirement fund and even their emergency fund. These are some of the most important funds that should not be passed up for student loan repayments.
As Forbes.com shares that the total student loan debt amount is already at $1.2 trillion, more and more borrowers are struggling to meet repayments and are just eager to get out of student loan repayments. Sometimes all they need is a breather from the monthly repayment to get back on track while others are in dire need of a break due to financial roadblocks.
And there is now more American consumers who are holding on to student loans. There are now about 40 million people who has at least one student loan according to Mainstreet.com. There are a lot of people who wants to get out of college debt now more than ever. And because of this, scam artists are taking advantage of desperate borrowers who wants to get out of repayment.
Options to get out of student loan debt
The number one way in eliminating student loans is to actually pay it off. But this is always easier said than done especially when the borrower experiences financial shortcomings. It could be from losing a job or transferring to a new career. It could also be that the family experiences some medical emergencies that drains the budget down.
In these situations, it is best for the borrower to understand some of their options they have in order to temporarily get out of student loan payments.
- Deferment on student loan payments. One of the best options for borrowers who are looking for a temporary postponement on their college debt payments. As ED.gov explains, deferment allows a borrower to put a hold on the principal payment and to some extent, even on the interest payment. The break on the loan is already a big help and non-accrual on the interest payment will help manage the repayment when the borrower gets back on repayment.
- Forbearance on the payments. One way out of student loan payments is applying for a forbearance on the debt. It is similar to deferment with one major difference, the interest payment will continue and accrue on the loan. When the borrower gets back on the repayment, they will see a bigger principal amount because the interest accrued and was added to the principal amount. This can lead to bigger monthly repayment amounts.
- Consolidating student loans. This is one of the most used repayment program of student loan borrowers and helps make the repayment a little easier. It combines several student loan accounts and makes the borrower focus on just one student loan debt. It can certainly help the college debt holder get out of student loan repayment by making sure that they are able to make the payments on time every time.
- Forgiveness programs. Federal student loans has quite a number of unique advantage over private loans and one of them is their forgiveness programs. Most repayment plans of federal student loans has a forgiveness time element to it where it forgives debt that already reach the maximum repayment time frame. There is also a Public Service Loan Forgiveness (PSLF) program for federal student loans. This entices graduates to enter the public sector where 120 qualified monthly payments can help forgive student loans.
Preparing for college costs
As college graduates are entering repayment after months of grace period, there are high school students and families who are looking into college in a few months. As the ChicagoTribune.com shares that the 2014 college graduates are holding on to about $33,000 average student loan debt, the class of 2015 might just be able to overtake them based on historical and present data.
One way to approach college is to understand what you are getting into. Here are a few questions that you can use to help prepare for the college and the costs that goes with it.
- What industry do you want to belong to? Asking this leads to one of the biggest decisions you will ever make before going to college, what degree will you get? Understanding the field where you want to work can help you focus on degrees that can help you get there. Your skills, talents and even hobby can also contribute a lot in defining the field of study that you can get into for college.
- What type of school can you afford? This is the next big question after identifying the degree. There are a lot of colleges and universities in the country and they all range from community colleges to for-profit private schools. Look at the cost of attendance of the degrees you want to take up in each school and compare the prices. It is important to remember that your projected debt amount from college should be commensurate to your expected income in your field of work.
- Are there any income opportunities in school? Try to see if there are part time jobs that you can explore while you are in school. It is even better if you will be able to get something that directly relates to your target field of work. You get that much needed extra funds to pay for some college expenses and you also pile up months and years of work experience that is related to a future job. This can also be a work-study program that your school can offer to offset some school expenses.
- Are there any ore sources of free money? After you fill out the Free Application for Federal Student Aid or FAFSA and get some grants and even scholarships, do not stop there. There could be other sources of free money that you can use to pay for your college expenses. There are groups, association or even your parent’s company who might be great sources of any amount of free money for college.
Attitude towards student loan repayment
As soon as college is done and you are headed into repayment, you need to be methodical in your approach to be able to get out of student loan repayments.
- List down all your student loans. You need to make sure that you account all your student loans because if you have been taking them out year on year until you graduate, you are bound to end up with multiple student loan accounts. The last thing you want is to overlook one debt and let it enter default.
- Understand your repayment options. Private student loans does not have much options but federal student loans have multiple repayment plans. Apart from the Standard Repayment Plan, there are options that will take into consideration your income when computing for your monthly payment.
- Apply for auto debit. This automates the payment process and might actually save you a little on interest because other lenders use that as an incentive to apply in the program.
Getting out of student loan repayment is a tough situation. But keeping at it will eventually free you up in your payments.