The US faces a student loan debt crisis. Currently, undergraduate and graduate students have a total of $ 1.5 trillion in student loans. Almost 30 million Americans under 39 years of age struggle to repay their debts. With the average borrower owing more than $ 30,000, paying back student loan debt can be intimidating, if not impossible, for some.
If you are having trouble paying back your student loan, you are not alone. Almost 11 percent Of all student loans, 90 days or more are overdue, and more than 20 percent of borrowers have some degree of default on their student loan payments.
Several options could make repaying your federal or private student loans a little easier:
1. Consolidate or refinance your student loan
One way to help Relieve your student loan financially Consider consolidating student loans or refinancing. Either option could (and should) reduce your monthly payment and / or the total cost of your loan.
If you have a federal student loan, consolidating your loans can help lower your monthly payments, potentially lowering the interest rates on at least some of your loans, and maintaining the benefits of a federal loan. A loan consolidation consolidates all of your student loans into one loan.
Alternatively, you can refinance your student loan. A Refinancing would allow you to benefit from low interest rates. If you can lower your interest rate by at least one percent, refinancing can be an inexpensive option and a long-term solution. do not forget it Visit Credible to research prices from various private student loan companies to make sure you save as much money as possible.
However, it is important to note that you cannot refinance into a federal loan. So if you decide to refinance your federal student loans, you need to go with a federal loan private lender. It’s also important to note that both a refinance and debt consolidation take into account your income and credit history for qualification.
Use a tool like Credible to find your personalized pricing and make sure you save as much money as possible.
2. Customize your loan repayment plan
Sometimes a few adjustments to your current plan can make a world of difference. If your payment date conflicts with your rent or any other large payment, speak to your lender to change the due date of your payment.
If you need more help, there are a few plans that might be worth considering. However, most of these options only apply to federal student loans. If you have private student loansTalk to your lender for more information.
Income-based repayment plans: Federal student loan could qualify for one of four different plans including:
- The revised Pay as You Earn Repayment Plan (REPAYE)
- Pay while you earn the Payback Plan (PAYE)
- Income-based repayment plan (IBR)
- Income-based Repayment Plan (ICR)
Each of these plans base your monthly payment on your income. The first three listed will determine your payment based on 10 percent of your discretionary income. The ICR plan uses 20 percent of your discretionary income. All plans last between 20 and 25 years.
You can use Federal Loan Simulator to estimate your monthly payment under such a plan.
Postponement of economic hardship: If you are unable to make student loan payments, you can qualify for economic deferral. If you use one Postponement of economic hardshipWhen coupled with an Income-Based Plan, the balance owed at the end of the payment period disappears.
Public Service Student Loans Plan: Borrowers who work full-time for the government or a nonprofit could get their student loans out. Borrowers are required to repay their loans under an income-based plan and make at least 120 qualified payments.
Interest repayment: With private lenders, you may only be able to make interest payments. Some students make these payments to avoid accruing interest while attending school. You can also qualify for an interest repayment if you are having financial difficulties.
3. Reduce unnecessary costs
Whether or not you qualify for any of the above options, you can make repaying your student loan a little easier by reducing the cost. You could save a significant amount of money each month by cutting these expenses:
- Cell phone bill
- Internet and cable costs
- Streaming services
- Food bill
- Car insurance
- to eat out
It is rare for student loans to be completely wiped out by bankruptcy. If you cannot make payments, it is best to speak to your lender. They can work with you. Avoidance of payments can result in a lawsuit, garnished wages, loss of tax refunds, and / or social security benefits. Additionally, your lender (federal or personal lender) will report defaults to credit bureaus.