It’s no secret that student loans are a huge problem in America. Millions of Americans are struggling to repay their loans, and the average borrower owes nearly $30,000. The situation seems hopeless, but there are actually ways to get out of student loans without going broke. In this article, we’ll explore some of the options available to borrowers who are struggling to repay their loans.
The current state of student loans in America
As of Q3 2016, over 44 million Americans held student-loans totaling more than $1.3 trillion. According to the Department of Education, approximately 70% of bachelor’s degree recipients borrow to finance their education. The average borrower owes nearly $30,000 in student loan debt, and about 10% of borrowers owe over $100,000 in student loan debt. Student loan debt is the second largest type of consumer debt in America, behind only mortgage debt.
The current state of student-loans in America is quite dire. Millions of Americans are struggling to repay their loans, and the average borrower owes nearly $30,000. While there are ways to make repayment easier, the best solution is to never take out loans in the first place.
Ways to make student loan repayment easier
There are several ways to make student loan repayment easier. One method is to set up automatic payments. This ensures that you will never miss a payment and that your payments will always be on time. Another method is to pay more than the minimum each month. This will reduce the amount of interest you accrue and help you repay your loans more quickly.
You might also consider refinancing your loans. This can be a great way to lower your monthly payments or get a better interest rate. If you have private loans, you may be able to qualify for a lower interest rate if you have good credit. You can also look into income-driven repayment plans, which base your monthly payment on your income and family size.
If you are currently in school, one of the best things you can do is get a part-time or full-time job. Working while in school can help you offset the cost of tuition and other expenses. It can also help you build up good credit so that you can qualify for better rates when it comes time to refinance your loans after graduation.
Forbearance and deferment options
Although federal student-loans offer a number of repayment options, forbearance and deferment are two of the most common. Both options allow borrowers to postpone making payments, but they differ in how they do so.
With forbearance, borrowers can make smaller payments or temporarily stop making payments altogether. Although this may seem like a helpful option in the short term, it will ultimately increase the interest accrued on the loan.
Deferment, on the other hand, allows borrowers to postpone making payments entirely. This may be a good option for those who are experiencing financial hardship or who are going back to school. However, like forbearance, deferment will also increase the interest that accrues on the loan.
Borrowers should contact their loan servicer to learn more about these options. Servicers can help borrowers understand which option is best for them and their unique circumstances.
Loan consolidation and refinancing
Loan consolidation and refinancing can be a great way to make repayment easier and save money.
When you consolidate your loans, you are essentially taking out a new loan to pay off your existing loans. This can be a good idea if you have multiple loans with different interest rates. By consolidating your loans, you will have one monthly payment to make, and you may be able to get a lower interest rate.
Refinancing your student-loans means taking out a new loan to pay off your existing loan. You might consider refinancing if you can get a lower interest rate than what you are currently paying. If you have private loans, you might also be able to get a longer repayment term, which can lower your monthly payments.
Before you consolidate or refinance your student-loans, it is important to compare offers from multiple lenders. Make sure to compare the interest rate, fees, and repayment terms before making a decision.
Student loan discharge and forgiveness programs
There are several ways to get out of student-loans without going broke. One way is to sign up for an income-driven repayment plan. With an income-driven repayment plan, your monthly payments are based on a percentage of your income. There are four different types of income-driven repayment plans, and you can choose the one that best fits your needs.
Another way to get out of student-loans is to apply for public service loan forgiveness. To be eligible for this program, you must work full-time for a government or nonprofit organization. You also must make 120 qualifying monthly payments. After you have made those payments, the remaining balance on your loan will be forgiven.
If you are a teacher, you might be eligible for teacher loan forgiveness. To be eligible, you must teach full-time for five consecutive years in a low-income school or educational service agency. You also must meet other requirements, such as being certified to teach in your state. If you qualify, up to $17,500 of your loan will be forgiven.
Perkins loans are another type of student loan that can be forgiven. If you have a Perkins loan, you might be eligible for Perkins loan cancellation and discharge. This program forgives 100% of the loan balance if you teach full-time for one year in a low-income school or serve in the Peace Corps. There are other ways to qualify for Perkins loan cancellation and discharge as well.
There are also other ways to get your student-loans forgiven. You might be eligible for Loan Forgiveness for Doctors and Nurses, which forgives up to 85% of the balance on your student-loans if you work in a public or nonprofit hospital or medical facility full-time for at least five years. There is also the Military Student Loan Forgiveness Program, which forgives up to 100% of your student loans if you serve in the military for at least three years.