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In this podcast I will answer the question: How do get our of my student loan debt?
Many people do not realize the impact of student loans when they are going to college. Once out and faced with all of the other financial challenges, repaying student loans can be a challenge. Here are 4 tips to address student loan debt:
1. Loan Forgiveness
If you work for a government entity or an approved non-profit, such as: a teacher, doctor on a reservation, law enforcement, etc, you may be able to reduce your total student loan. The Public Service Loan Forgiveness Program allows you to reduce your payments in relation to your income and after 10 years of paying (120 payments).
Employment (at least 30 hours/week) with the following types of organizations qualifies for the forgiveness plan:
- Government organizations at any level (federal, state, local, or tribal)
- Not-for-profit organizations that are tax-exempt under Section 501(c)(3) of the Internal Revenue Code
- Other types of not-for-profit organizations that provide certain types of qualifying public services
- Serving in a full-time AmeriCorps or Peace Corps position also counts as qualifying employment.
2. Don’t Fall Behind
The penalties for falling behind on student loan payments are significant and student loan debt is pretty much inescapable.
3. Bankruptcy Doesn’t Help
For 99% of student loans, bankruptcy does not discharge this debt. Bankruptcy can remove credit card, mortgage, and car loan debt but not student loan debt.
4. Adjust the Duration
You can ask for an extension if it’s necessary. You have two options:
Deferment – if you have not gotten a job yet you may get up to 3 years of deferment, but depending on the loan, the interest may continue to be applied. There is a deferment option if you go back to school.
Forbearance – can be granted if you are ill or experiencing a financial hardship (layoff) or a military deployment. With forbearance your payments may be suspended or reduced for up to 12 months. Interest continues to apply to the loan balance.
However, we recommend (if possible) paying off student loan debt in a reasonable amount of time (generally, within 10 years).