Many people are struggling with student loan debt nowadays. The cost of higher education has gotten astronomically high, with some private schools charging close to $100,000 a year for tuition. Over the course of four years, it is not uncommon for people to graduate from college with hundreds of thousands of dollars in debt.
Graduating with that type of debt can be overwhelming, especially if you cannot find a high-paying job right away. Plus, you likely have savings goals, such as a car or a house.
Want to get rid of your student loans? Here are some tips to help you repay the debt quickly.
Student Loan Forgiveness
This would be the best way to eliminate your debt, but it is not available to everyone. Public servants and teachers often qualify. So do those who are disabled. Research debt forgiveness programs to see if you qualify.
Income-Driven Repayment Plans
Under income-driven repayment plans, your monthly payment is limited to no more than 20% of your discretionary income. This makes loan repayment more affordable. Plus, after a repayment period of 10 to 25 years, your remaining debt balance will be discharged.
Consolidate Multiple Federal Loans
Borrowers with multiple federal student loans can combine their debt into one loan with a single monthly payment through a Direct Consolidation Loan. Most types of federal student loans are eligible. You may be able to lower your monthly payment by extending your repayment term. You can also pay off debt faster by requesting a shorter repayment period with higher monthly payments.
Refinance at a Lower Rate
Refinancing allows you to take out a new loan from a private lender to repay the balance of your student loans. A lower interest rate can help you pay off debt faster or reduce your monthly payments. You may be able to save thousands of dollars in interest charges.
Consider Deferment or Forbearance
Both deferment and forbearance allow you to postpone or reduce your federal student loan payments. The difference between the two is interest accrual. During a deferment, interest does not accrue on some Direct Loans. During a forbearance, interest accrues on all Direct Loans.
File for Bankruptcy
You may have heard that you cannot discharge student loan debt in bankruptcy. You can do so, but it is difficult. It is easier to get private student loans forgiven rather than federal student loans. Also, you should choose other options first and only consider bankruptcy as a last resort.
Get Expert Advice on Student Loan Debt
College tuition is expensive. Many people take on tens of thousands of dollars in student loan debt and then struggle to pay it back. Is bankruptcy the answer? In Maryland, The Law Offices of Adam M. Freiman can help you understand your financial options.
