Student loans can bug you for a long time. You would take a student loan for getting an admission into a top university or a business school. But these educational institutions are expensive and paying off your loan debt can be a headache.
And it so happens that after you complete your course and start working you wouldn’t be in a position to clear the loan debt. This is when more pressure is piled upon by the loan authorities. But there are ways of getting rid of your student loan.
1. Paying the loan amount on time is the simplest and commonest way. Prevention is better than cure and going by the rules and ethics will keep you away from financial trouble. You must try paying on time as your credit score is aided by a decent history of payment.
It will be of benefit for a long time. By making your payments on time and eliminating the debt you will stay away from the trouble of accumulating further debt and its consequent troubles.
2. Earning a bit more than what is actually needed always helps. Similarly, keeping a bit more money than what is required will help you in future payment of bills. Paying by the due date will keep you away from trouble. If you are in a position to pay a lump sum amount then it is better as paying a lump sum amount will help avoid accruing of interest.
3. Try talking your way out of the trouble. Approach your loan providers and let them know that you do intend to pay the money but at the moment you do not have the means to pay. You can cite health complications, unemployment issues, lack of full time employment, a low wage etc.
Though all they really want from you is the rightful payment but they are humans and have different programs that are lenient towards you. Through loan deferment your interest won’t accrue.
In the forbearance policy the interest will continue to accrue but a monthly payment will not be required. By this the effect on your credit score will be less and it will have a better value. This is because through these programs you will not officially miss any payment.
4. Consolidation of your loan is a good option. Many loan lenders happily loan you so that you can pay your business school or university’s fee. But if you have no credit or not the required credit while taking the loan you will be charged with a high rate of interest. And it can be an even bigger problem if you have enrolled for multiple loans.
By consolidation of your student loan you have a better rate of interest, your monthly payments will be lowered and you will be required to pay just once a month as opposed to multiple payments every month.
5. Refinancing your loan debt is better than consolidating it. Consolidation will save you more money and your payments will be lowered but the pressure of paying every month will not be lessened.
Refinancing your loan debt will lengthen your loan’s term. By this the loan debt will be spread for a longer time and the monthly payments will be 50 percent reduced. This will of course stretch your loan payment to a long period and it can be uncomfortable in the future.
6. Loan forgiveness programs help you to reduce your loan debt. AmeriCorps offers a loan forgiveness program in which you need to volunteer for them, develop a work history, and receive money to pay your student loans. The payment is not much but it comes with a chance to either live totally or almost free as they take care of your expenses.
Childcare, healthcare, law, teachers, Human resource department¸ in-house programs offered by certain jobs, will have special student loan programs. They can help you get rid of your student loan once and for all as there are various institutions that offer help for relieving you of your loan debt.
But the above mentioned resources ask something in return – they ask for you to dedicate to their work/cause for a required number of years and to serve for the betterment of their idea and the community. Long term commitment can be a problem.
If you can dedicate yourself, adjust to their customs and create a good work history then you can pay your loan debts off else you need to work really hard and pay your loan debts yourself.
In Conclusion
It is always wise to start everything right. When you apply for a student loan, research various loan providers and go for the one which is the most feasible and flexible and suits your situation the best. Temptation can be good for a short time but brings much trouble in the long run. Choose wisely and pay on time.
Great tips. I had to consolidate my federal loans which stretched out the payments from 10 years to 25 years. Not ideal, but my payments per month are more management since I have yet to secure a full-time job in the field I went to school for.
Ouch. Yeah, definitely not ideal but your paying it off slowly but surely.
And, that’s the thing about going to school with debt, you are not guaranteed to land your dream job you wen to school for. Even though college education is a necessity, I like to advise others to attend school while being able to afford it!
Thanks for reading 🙂