04 Sep 3 Ways To Handle Student Loans
Are you having trouble figuring out the best way to pay off your student loans? Don’t stress, you’re not alone. Many people who’ve attended college know the struggles of student loans.
They can be a pain when the payback schedule kicks in and the interest starts to eat your breakfast, lunch, and dinner.
Here are a few ways you can go about handling your student loans.
This is easier said than done of course. When paying off student loans people tend to stick to paying the smallest amount due to just get by. While this takes care of the monthly bill and keeps you from getting behind it doesn’t protect you from interest. Try adding $50 or $100 to your payments every month. Every little bit helps when trying to offset the interest you are being charged on the large sum.
Next pay off tip is to come up with a plan and stick to it. Figure out exactly how much you owe and decide when you want it paid off by. Most of the time this is determined by how much you can afford to pay per month. Getting organized and on a payoff schedule is the best and most efficient way to tackle your student loan debt.
If you find you don’t have any extra funds to put toward your bill every month you can try one of the many different ways to make money from home. You can have a yard sale or sell your unwanted items on eBay. Etsy is a great website for people to sell their handmade goods. Cut back on unnecessary spending such as entertainment, eating out, or shopping.
The options are endless. If you need the money there are plenty of opportunities to make a little side cash on the Internet.
Lower The Interest Rates
Another great way to get your student loans paid off is to get your interest rate dropped. Unless you got lucky, you’re current interest rate is high. The key to paying anything off is to stop spending. With a high interest rate it’s like you never stop spending and it’s a never-ending battle.
Give your student loan company a call and request to speak with someone in the collections department. You might get transferred around a few times before you’re finally able to connect to the right person but once you do, it’s worth it. Ask the person if you qualify for an interest rate reduction.
There is one way you can do this and it’s based off of your debt to income ratio. You tell them everything you pay for per month and don’t leave anything out. They will use the program to decide what your new interest rate will be based on the amounts you provide. The chances of you getting lower than 3% are slim. On some loans getting down to 3% can make a world of difference.
There are tons of loan forgiveness options out there. Two options are the ‘Income-Based Repayment Plan’ or the ‘Pay As You Earn Repayment Plan’. If your student loan is higher than your annual income or makes up a significant part of your income you may qualify for an IBR or PAYE Plan.
The PAYE Plan is newer and an alternate to the IBR plan with lower payment options. The remaining balance of your loan is forgiven after 20 years of qualifying payments and an interest subsidy on the PAYE plan, and after 25 years on the IBR plan.
There is also an ‘Income-Contingent Plan’ aimed at helping students who took a job out of college they knew wouldn’t pay as much. It’s an option for those who can’t qualify for the IBR or PAYE plans. Monthly payments are based on your income and family size and are much higher than if you went with an IBR or PAYE plan.
The ICR forgives the remaining balance of your debt after 25 years. Remember, you’ll need to pay taxes on any forgiven debt.
There are other loan repayment plans such as the NIH Loan Repayment Plan for Doctors. Some colleges offer loan repayment options for Lawyers and there are PSFL programs for Teachers. Make sure you do your research when determining which program best suits you and your family’s needs.
While student loans can feel like a burden don’t get down on yourself. Your degree is worth more than ever nowadays and once your loans are paid off it will all have been worth it. Stick to the plan you set for yourself and your loans will be paid off in no time.