We’ve finally made it one semester left! Time will fly by and before we know it it’ll be May. And I know when we strut our stuff across the aisle, to receive our fake diploma, we will not be thinking about loan repayment. We will be focusing on trying not to fall and the vacation that we just booked.
In order to overcome the worrisome application of paying back your student loans you should know a few things: there is a way to condense your loans into one bill (consolidate your loans), there are federal government loan forgiveness programs, programs specific to majors, state loan repayments/forgiveness and scholarship programs, Public Service Loan forgiveness and finally there are loan payment programs. Before choosing whether to enroll in a program, or to consolidate your loans keep in mind that it is important to pay your student loans. The longer you procrastinate, the more in debt you will become and eventually, your loans will default. Essentially, if you don’t make payments on your student loans, your loan is delinquent. Your loan is considered delinquent from the day after you miss a payment until you make up that missed payment or it enters default. When a loan is delinquent, late fees may be charged to your account, and missed payments are reported to the four nationwide credit bureaus. If you haven’t made a payment for more than 270 days, your loan enters default. In default, the full balance of your loan is due immediately, and there may be other financial and legal consequences. As you can see the consequences are rough and The Department of Education will make it hard so, let’s talk about ways to relive this burden.
You are eligible to consolidate your loans: after you graduate, leave school, or drop below half-time enrollment. Consolidating your loans can greatly simplify loan repayment by centralizing your loans into one bill and possibly creating a lower monthly payment. Pay close attention to the repayment plan you are enrolling in because if it requires you to increase the length of your repayment period, you are essentially increasing the price of your loans (due to the extra amount of payments and interest collected). Before consolidation, review the monthly payments with and without consolidation to ensure that consolidation is the best option. There are some downfalls by using this approach such as: once all of your loans are combined into a direct consolidation loan it can no longer be undone and you may lose borrower benefits from your original loan.
The forgiveness repayment programs are great, but I wouldn’t bet on it unless you will or hope to work in the medical, law, public service or education field. Therefore I suggest that you highly consider looking into Obama’s Student Loan Forgiveness programs they are not focused on industry or public service. If you enter a student loan forgiveness program they are terms and conditions for each program that has to be followed or else it could create financial problems. There are cons with using this approach as a means of debt repayment such as: elusive hunt of finding the program you qualify for and the strict program requirements. For example, in order to qualify to have the remainder of your Federal student loans forgiven you must have made 120 payments. In addition you must be on a qualifying repayment plan and have worked at a qualified public service organization for the entire time and submit paperwork annually to your loan servicer. Not adhering to these rules you will be disqualified from being granted forgiveness. Not to mention if you miss a payment, change jobs, or forget to submit your paperwork promptly after 120 payments can lead disqualification. The list goes on and on Forbes does a great job illustrating all the “dangers” associated with loan forgiveness programs. When you check out the link be sure to scroll all the way down to see relevant links regarding the article.
Don’t be overwhelmed I will summarize! As mentioned above there are three main ways to repay your student debt: sending payments to all loans received, loan consolidation or enrolling in a loan forgiveness program. If you need to postpone monthly payments (for returning to school, military duty, economic hardship, or unemployment) deferments and forbearances may be available. Keep in mind, interest may continue to accrue, even when you’re not required to make payments. As far as the loan forgiveness programs they may forgive all or part of your loan balance if you meet the criteria. Qualifying professions include but are not limited to: military service, public safety, public education, social work, public and school librarians, public defenders, teachers, AmeriCorps, Peace Corps. And whatever you do in the future, DO NOT miss a payment.
Don’t let student loan debt get you down, fight back with the power of knowledge and enjoy your vacation. Who knows I just might be the passenger sitting next to you.