Monday, May 20, 2024

How To Handle Student Loan Debt

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How to handle student loan debt

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What Is A Student Loan

If you dont have the money to pay for college, a student loan will enable you to borrow money and pay it back at a later date, with interest.

College loans are different from a grant or scholarship. If you receive a grant or a scholarship youre not borrowing that money. That is money that has been given to you as a gift and doesnt need to be repaid.

Minimize Your College Expenses

Minimizing your college expenses includes picking the most cost-effective college, learning to write and use a student budget, and keeping your lifestyle relatively low cost.

Students who find a healthy balance between enjoying the college experience and keeping a tight wallet will set themselves up for a smooth transition toward financial adulthood.

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Make Use Of Resources To Pay Off Student Loans

If you find yourself in a bad spot, consider contacting the U.S. Department of Education for help or to speak with a professional.

Before heading to bankruptcy , there are options of debt consolidation and debt settlement.

In debt consolidation, several of your debts are rolled into one. The debts amount doesnt change, but you will have just one bill per month and the monthly payment should be less than what you were paying individually. Over time, you might save significant money in interest.

In debt settlement, the debt is reduced through negotiations with your lenders. A debt settlement company can negotiate directly with your creditors.

There are many reputable professionals, such as those at InCharge, who can help with student debt management. The key is communication. With early anticipation of a potential problem, then contacting the right people, you can arrive at the best-case scenario.

Get A Lower Interest Rate

How to Handle Student Loan Debt Collectors

If seeing your student debt balance balloon is what contributes to your anxiety, getting a lower interest rate might help.

Refinancing your student loans means trading in your current loan for one new, consolidated loan through a private lender.

Through refinancing, you can earn a lower interest rate while also having the opportunity to choose a loan repayment term that works best for your current financial situation. Perhaps you want to accelerate your debt payoff and shorten your loan term by making higher monthly payments each month. Or you could choose to extend your loan term so that your monthly payments are smaller.

Breaking your debt into smaller, more manageable payments may help you feel more at ease, says Taylor.

With federal student loan payments on pause and interest set to 0% through September 2021, federal student loan borrowers should wait to consider refinancing until the forbearance period ends.

On the other hand, refinancing right now is a good idea for private student loan borrowers since rates still remain low.

While most lenders require you to have good credit, Earnest Student Loan Refinancing allows fair credit applicants with a minimum credit score of 650 to qualify, and there are no minimum income requirements.

Terms apply.

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How To Pay Less Interest

You can reduce the amount you pay in interest or by refinancing your student loan to a loan with a lower interest rate. However, refinancing federal student loans into a private loan means a loss in many benefits income-driven repayment options, possible loan forgiveness or widespread forgiveness, generous deferment options, and a death and disability discharge.

Meet Millennials Series With Ava: Now Lets Talk Money

Hi, Im Ava.

Im a 31 year old Consultant. I have an undergrad in business and an MBA in Finance. I recently got married and moved out west from the east coast to start a new life with my husband and our doggie baby.

I started a personal finance and lifestyle blog over at .

On the blog, I talked a bit about my background, my childhood, and how I came to owe 160k in student loans by age 25.

Before you judge me for the outrageous loan amount, let me explain how I got to that point.

Be forewarned, my story is pretty unusual. Only close friends know the full details of my background, mainly because its hard to believe and I worry people who dont know me well will think Im making it up.

You can skip ahead to see how I plan to pay off student loans here.

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Student Loan Debt: Learn How To Pay Off Your Loans

Student loan debt is a crisis in the United States. As of early 2021, $1.7 trillion dollars was owed on educational bills, according to the St. Louis Fed. That affects almost 50 million people, according to data analyzed by NerdWallet.

” become an inescapable type of reality of higher education, said Kelly Anne Smith, a consumer finance reporter at Forbes Advisor. Money problems like having a $10,000+ loan hanging over your head can feel really isolating. But you are not alone. Heres what you need to know to tackle your debt head on.

Select A Repayment Plan For Your Federal Student Loans

How Do I Handle $180,000 Of Student Loan Debt?

Within the grace period you may receive information about repayment from your lender. Youll have a choice of several repayment plans. Find the right one for you.

Most federal student loans are eligible for at least one income-driven or income-based repayment plan . These repayment plans are based on a percentage of your discretionary income. Theyre designed to make your student loan debt more manageable by reducing your monthly payment amount.

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Q Are Student Loan Burdens Economically Handicapping An Entire Generation

A. More adults between 18 and 35 are living at home, and fewer of them own homes than was the case for their counterparts a decade or two ago. But these trends are mostly due to these folks entering the work force during the Great Recession rather than due to their student loans. Federal Reserve researchers estimate that 20% of the decline in homeownership can be attributed to their increased student loan debt the bulk of the decline reflects other factors.

Pay Your Interest During Deferment

Depending your loan type, you may opt for a deferment if youre in school, unemployed, experiencing an economic hardship, an active military member, or another approved situation. If thats the case, opt to continue making interest payments on your loan to help alleviate the burden once your deferment ends.

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Ask Your Employer About Student Loan Assistance Benefits

A growing number of companies are including student loan assistance as an employee benefit to recruit and retain talented and educated professionals. For example, PricewaterhouseCoopers launched its Student Loan Paydown program in which the company will contribute up to $1,200 per year towards paying down its employees debt. Other companies are working with refinancing companies to help offer lower rates.

Ask your employer if they have any benefits you can tap. If they dont offer a benefit, you can always suggest they add it youll be helping yourself, as well as all of your co-workers who are in the same boat.

Getting By With Really Big Student Loan Payments

How to Handle Student Loan Debt

In reality, I know housing and debt make up well more than 50% of income for many young people. Ive been there. Although its possible to survive in this scenario, it creates two problems:

  • You have little money leftover to save or enjoy
  • Your finances are more at risk of being derailed by an unexpected expense or loss of income

If youre a doctor, lawyer or another professional with a stable six-figure income, you might be totally comfortable laying out more than 40% on loans and housing because the money left over is ample. If youre living with student loan payments and a housing payment that are more than 40% of your income, you might choose to continue with that precarious situation until you can increase your income, but you may also want to explore federal payment options and/or refinancing to reduce your monthly payment amount.

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Policy Goals For Helping Current Borrowers

Overall, the purpose of any policy proposal for current student loan borrowers has to be about reducing the negative effects of these debts. That said, each policy idea may attempt to address a different negative effect. For example, policies focused on interest rates target negative effects related to the size of monthly payments, which can help with faster repayment over time. Meanwhile, policies focused on immediate forgiveness are about reduction in the amount owed right away, while those with longer-term forgiveness may be about creating a safety net for those with perpetual struggles.

Regardless of which problem a given policy tries to solve, it is important that it consider four factors: equity, simplicity, striving for broad impact, and providing a sense of meaningful relief. Understanding how a given policy idea lines up against each of these goals can help policymakers ensure they optimize their solutions for the problems they want to address and in a manner that would be effective. More on each of these goals follows below.

Address equity

While the various challenges student loans present may be clear for certain individuals who are in different situations and financial circumstances, meaningful variations exist even for borrowers who otherwise have the same levels of educational attainment and/or income. This can be due to other factors such as the presence or absence of familial wealth or discrimination in housing or employment.

Ensure simplicity

Student Loan Debt No: Relief

Over the years, the federal government has instituted various programs to help deal with costs of student loans. For example, if you decide on a career that does not provide high levels of income, such as working for a nonprofit, a school or a local government, then part of the debt could be eliminated with the Public Service Student Loan Forgiveness Program .

Next, you may be able to defer payments if you are unemployed or have health problems. However, this process can be tricky and may require that you provide evidence of your situation.

And what if you cannot get a deferment? Well, in this case, you might be eligible for forbearance. Like a deferment, you will not have to make payments, but the interest will still accrue. Ultimately, the hope is that your hardship will only be temporary, so the overall costs of the loan may not be so bad.

Keep in mind that all of these apply to federal loans. Still, a private lender may still be amenable to some type of forbearance, but there will probably be a fee required.

Tom Taulli runs the InvestorPlace blog IPO Playbook as well as, which provides interactive tools & services for employee stock options of pre/post IPO companies. Follow him on Twitter at . As of this writing, he did not hold a position in any of the aforementioned securities.

Article printed from InvestorPlace Media,

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How To Deal With Student Loan Debt

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After US President Biden announced the cancellation of $1 billion worth of student loan debt, student loan debt relief has become a major topic not just in the United States, but around the world.

Unfortunately, not everyone will be included in the program. Bu, there are other more feasible ways to deal with student loan debt, not to mention dealing with student loans is much easier than before, especially with programs like student loan repayment plans.

If that’s your ultimate goal, then there’s no time to lose. Here are some of the things you can do to eliminate or, at least, make it easier for you to pay off your student loan debt:

How To Handle Student Loan Debt Collectors

How to Deal with Student Loan Debt

When you default on a student loan, the government will usually hire debt collection agencies to collect on these loans. Its not quite as straightforward as you might like to think, to try and get this loan to just disappear. The collection agencies are sometimes known to twist their words around to get what they want, while leaving you confused and hanging. Everyone needs to be aware of their rights and how to handle these debt collectors. Knowing this information will help you avoid many of the pitfalls associated with dealing with these companies.

Thanks to the Fair Debt Collection Practices Act , a Federal loan collectors word is bound by the law. Anything they say should be taken literally, and at face value. However, always be careful when they say things that seem too good to be true, their words might be contorted to the point that you dont understand their true intentions. Debt collectors are NOT allowed to make false claims, such as their ability to seize your house or to have you arrested. You should know that if a collector does happen to make false claims then you have the right to speak with the FDCPA and let them know of the issue. The FDCPA was set up to eliminate abusive practices in the collection of debts and to provide consumers with an avenue for disputing and obtaining validation of debt information.

Becoming Debt Free Starts Here

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Continue To The Next Article Student Loan Debt And Waiting Periods

If you want to learn more about how to deal with your student loan debt then you should speak with a Licensed Insolvency Trustee. You can find trustees everywhere from Ottawa to Montreal, from Calgary to Quebec and more. Find one today!

You can also skip to any one of the article sections below to continue reading or re-cap on any information covered in this series of articles

How To Handle Student Loan Debt During And After College

Yes: Student Loans Can Be An Effective Way To Pay For Your College Educationâ¦

However, itâs important that you prepare yourself for the realities of eventually having to repay your loans. Students who successfully repay their student loans are those that take advantage of their time in college to consider their student loan options, live with a student budget, and prepare themselves for repaying their loans.

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What Are The Costs Of Hiring A Student Loan Lawyer

Our services are offered on a flat fee basis calculated as a percentage of the debt. Typically, we can settle our clients debt for 55-60 cents on the dollar and without the need for bankruptcy. If our clients end up being sued, we represent them through the trial for $500 plus the cost of filing the answer.

Automate Your Loan Payments

How to Handle Student Loan Debt

Many loan companies will offer an interest rate discount if you sign up for automated payments. Not only do automated payments ensure that your loans get paid on time, avoiding costly late penalties, but every bit of savings helps in the long run.

The best thing you can do for your student loans is to be pro-active and take action. The sooner you get your debt into a more manageable situation, the sooner you can get both mental and financial relief that youre doing the right thing. Good luck!

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Start Early With A Part

Getting a part-time job while attending college is one way to keep college debt in check, because you can use those earnings to get a head start on paying down your balance.

Lets say youre able to work a part-time job that allows you to put away $500 a month. In a year, thats $6,000 you can put toward paying off your loans. Whats more, you can earn up to $6,970 a year without affecting your eligibility for need-based financial aid.

Takeaway: If youre still able to properly manage your coursework, a part-time job is a great way to earn enough money for a student loan savings account while learning time-management skills.

Next steps: Check your schools resources or career center to see if theyre hiring for any on-campus jobs. Typically, on-campus jobs are more understanding of unusual or busy class schedules.

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