Ease Your Student Loan Burdens In Five Simple Steps
The graduating class will be leaving college with more than just a degree. Sources say that student debts have reached a record breaking high. The rise of tuition fees has made it harder for families to cover the cost of going to college and more students are pushed to resort to loans. While these can be tough, they can hold you by the neck if you do not manage them well enough. Here are some tips on how you can get out of a student loan quick.
Pay for What You Can Afford
It is vital to get realistic when setting up a payment plan for your student loans. The current economic climate makes it more likely for college graduates to be underemployed for years early on in their careers.
Experts advise that you avoid taking out more in student loans than you would expect to make during your first year after college. You have to be aware of how much debt you will be in against how much you will be earning. Be honest with yourself. If you do not work with lenders to come up with a payment schedule, you are very likely to get enrolled in the standard payment scheme that would require you to make higher monthly payments. It is also important to note that if you choose a lower monthly payment rate, you will pay more in interest.
You Have Federal Loans but Cannot Afford the Monthly Payment
Forbes says that when your monthly student loan payments are high compared to your monthly income, you could qualify for an income-driven repayment program. With these, your monthly payment would be capped at around 10 percent to 20 percent of your disposable income. If you are lucky enough, you might not even have to make any payment at all.
You also would have to enrol in the program every year. Your payments will adjust based on how much you earn. This means that for as long you are qualified for the program, your balance would be forgiven at the end of the term.
Come Up With A Strategy
The best option would be to pay off as much as you can on your loans as soon as you can. You should choose the repayment plan with the highest monthly payment that you can afford. When you do this, you can save the most money out of the loan and will get out of student debt faster.
If, however, you are struggling to make the payments, you can get an extended repayment plan. This can be done by converting a standard 10-year loan into one that stretches to a reasonable amount of time. This will make your monthly payments more manageable. However, keep in mind that you will end up paying more in interest.
Ask for Forgiveness
You might not have to come up with a payment plan immediately to get out of student debt. Sometimes, your debt can be forgiven. Before anything else, you should consider taking a look at some government programs that can work to your favor. One worth considering is the Public Service Loan Forgiveness program where you can qualify for forgiveness on a part of the balance of your loans if you work a full-time public service job.
Be Willing to Make Some Sacrifices
You can come up with a lot of tips and tricks, but the best thing you can do for yourself when trying to crawl out of student loan would be to make some sacrifices. Being frugal is the key to make ends meet when dealing with tough terms of a student loan. This can be as simple as eating out less and refraining from extravagant purchases.
Always keep in mind that a penny saved is a penny earned. Every cent that you have saved can be invested in getting out of debt in less amount of time.
Crawling out of a student loan could be really tough. However, doing so is not impossible. Have you effectively managed a burdensome student loan? Share with us your tips in the comments below.
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