With rising cost of college at both public and private college, many students have turned to student loans to make it through school. But is this the right solution for students? With more and more student loans being given every semester, life after college can become a struggle. These students may be faced with huge monthly payments in the future. With around 30% of students already behind on at least one loan payment, many have been putting their lives on hold.
How High College Debt Can Hurt
Loan payments for many are so high that many serious life decisions are being put on hold right after college to accommodate the high payments. Such decisions can include having a family, getting married, puchasing a car, or buying a home. Others may put off furthering their education for a few years while they try to save. But when you cannot afford basic needs, saving also becomes harder. Graduates may opt for payment plans to afford things like homes or cars. Or, worse, they may end up taking out more loans. This can result in debt piling up for years to come.
The Truth about High College Debt
High college debts can seriously hinder future prospects now. Not only is finding a job now very difficult after graduation, but affording high loan payments is, as well. This is especially true when you may be searching for work for a few months. Do not take out a large amount of loans for your education. Instead, think and plan for your life after college now by doing your best to save money. Do not let high college debt be a weight upon your shoulders after your graduation day. Instead, we offer another way out.
Finding a Way Out
So what is the way out? Namely, planning. Start planning for your future, now. Look for scholarships and low tuition before entering college. Do your best to fully research all financial aid options. All these tactics are especially important if you are a nontraditional student just now going back to school. Studies show it may actually be harder for you to pay back your loans. Understand what increasing tuition can mean for your future. Get educated and start saving today!
With student loan debts possibly being over $30,000 once a student graduates, it’s important to plan ahead of how to successfully pay off your student loan debt and not feel the financial pressure. Here are a few techniques to successfully manage your student loan debt.
Get an Accurate Measure of Your Debt
Before you graduate from school, calculating your total and up to date balance can keep you in the loop of how much you have borrowed and what you are looking at being responsible for paying back. If you are starting after you have completed school, do so as soon as possible.
Contact your school and ask them to send you a copy of your financial aid history. This will have each disbursed loan and grant amount sent to the school. You can also ask your lenders for a copy of your account balance. Finally, log onto the National Student Loan Database (NSLDS) to pull your electronic history of your disbursed financial aid. Be sure to contact any private lenders as well to get their copies. Now compare the three and verify the accuracy of your account balance. If there are any inaccuracies, contact the lender as soon as possible to get everything straightened out.
Create Your Financial Plan
Now that you have calculated all of your loan balance, you can create yourself a budget. The true budget needs to consist of your student loans, current living expenses, and any additional debts. However, first we will just calculate your monthly living expenses and current debts and subtract that from your monthly income. Be sure to leave room for entertainment expenses and money to put into a savings account.
The number you reach afterwards should be positive. If not, and you are in the red, you need to come up with a plan to get yourself out of your current debt situation. If you are in the green, congratulations, this amount can be used towards paying down your student loan debt. Now you have a number to bring back to your student loan lenders.
Go Over Repayment Options with Lenders
Contact your student loan lenders to decide on your repayment plan. You already selected a plan when you completed your Master Promissory Note. However, you are at liberty to change your repayment plan. There are four basic loan repayment options, all of which can be switched to another plan at any time. Be sure to go over options with your lender if you are not able to make any payments.
For additional assistance to understand your repayment options as well as the application process, visit www.collegedebtsolution.com/Federal-Loan-Consolidation
Find Out if You Qualify for Incentives
Make sure to talk to your lender regarding incentives. Most will lower your interest rate if you select an automatic payment plan. Another incentive is the loan forgiveness program. Working in a public service job in a low-income community or volunteering at these jobs, can student loan debt. Visit the College Debt Solution to find out more about the Loan Forgiveness Program.
If you need to strategize on paying your loans off, target paying your private loans off first. Their interest rate may be higher thus increasing the amount you pay back substantially more, if you cannot afford to pay more on it. Also, you may not have access to other loan incentives like multiple payment options.
Reports suggest that 60% of the college students are drowning in college debt as they took out too many student loans to finance their bachelor’s degrees. The College Board reports released in the last month of October, 2013 shows that the students have borrowed an average of $27,000 on educational loan debt. The students who pursue a master’s or a professional degree usually tens and thousands of dollars on their tab. In fact, student loan debt crisis is the next big disaster that is going to paralyze an entire generation. If only the graduates could think of some ways through which they could avoid the burden of student loan debt, they could have graduated into a better and brighter future. Repaying student loan debt is a huge responsibility as there is no other option of discharging the debts through bankruptcy. Here are some tips that you can follow in order to eliminate student loan debt and maintain a safe distance with the same.
1. Look for scholarships if you’re still in school: Are you still in school while you find yourself saddled with student loan debt? Well, scholarships may be there in your mind when you’re applying for your school but always remember that you keep looking out for them throughout college so that you can match your extracurricular and academic accomplishments. You can have a talk with the financial aid office of your school to inquire about funds that are specifically beneficial for your school. Applying might take some time but this is free money and therefore you should give your best efforts.
2. Get organized with your finances: Being a student and staying out of state, doesn’t give you the right to take all the wrong decisions about your finances. In order to tackle your student loan debt, the first step that you need to take is to organize your finances so that you don’t miss payments and make late payments. Use a calendar or a tracking tool in order to keep a tab on each and every dollar that you spend. Set up a different account for bill payment.
3. Follow a frugal budget: You can follow a frugal budget in order to eliminate all the worries of missing payments and incurring late fees and penalties. Unless you devise a frugal budget, you won’t be able to maintain a track on your pennies. You need to keep a close watch on your money so that you don’t make the mistake of spending more than what you earn. Always spend less than what you make so that you have enough to save.
4. Try the loan forgiveness options: If you want to eliminate your student loan debt without repaying them and without seeking professional debt help, you may try forgiving the student loan debt through different public service programs.You can certainly help yourself by forgiving a portion of your student loan debt but in lieu of that, you have to agree to work in high need areas for a fixed number of years (see requirements). These areas include the rural communities and schools and medical clinics and even low income families.
Therefore, when it comes to repaying your student loan debt, you have to take some watchful steps about managing your finances and keeping debts at bay. Follow the steps mentioned above and get help of the professional financial advisors in order to stay on the right track.