Student loan debt has become something of an epidemic. These loans can be sizeable and ultimately stressful. Many young people in America are even afraid to make a monthly payment on their student loans. It might seem impossible to handle due to the huge balance that doesn’t seem to be going anywhere.
When you are young you are impressionable. Today’s millennials are no exception. The accumulation of student loan debt is considered a necessary and essential burden to the achievement of their careers. Many find themselves employed after college. However, according to CareerBuilder.com, about half of college graduates in 2014 were employed in jobs that do not require a college degree.
To make matters worse, student loan lenders start harassing their “clients” immediately upon graduation. If you are one of these clients, you probably already know that nothing in this world is easier than debt. The chances that you will have money to pay off your student loan debt so soon are pretty slim.
Before leaving high school, these impressionable young people are led to believe that a college education will lead to a guaranteed career. Turns out it’s not that simple. The Washington Post reported in 2013 that, according to data from Jaison Abel and Richard Dietz of the Federal Reserve Bank of New York, only 27% of college graduates had jobs related to their major. If this comes as a rude awakening, I apologize. There is no simple way to make your dream job come true and get rid of your student loan debt. However, it takes action, commitment, and it is possible.
Student loans. If reading those two words infuriates you, don’t worry. Should. Paying off student loans may seem impossible, but there are ways you can help yourself. The first thing to do is understand what type of loan you have. Some loans are eligible for certain benefits that can help your situation.
Check out the National Student Loan Data System (NSLD). This website is home to the US Department of Education database for student aid. Only federal student loans are eligible for this aid. In my experience, I have spoken with more people with federal loans than with private loans.
A good idea for those who are unemployed or “between jobs” is postponement or forbearance. A deferment or forbearance allows you to temporarily stop making your federal student loan payments or temporarily reduce the amount you pay. This could be useful if you are at risk of defaulting on your loan. A default occurs when you have not made your monthly payments for a long period of time. In the event of default, the lender will take legal action to get your money back.
If you are eligible for deferral, the federal government can pay the interest on your loans during the deferral period. The opposite applies to tolerance. In a forbearance, you may be able to reduce your payments or stop payments entirely for up to 12 months.
These options can give you room to breathe and pursue the career you have long studied to achieve.
There are other options available to help lower your monthly payments to a manageable level. There are income-based repayment plans for people with direct loans or Federal Family Education Loan (FFEL) loans. In an income-based payment program, your monthly payments can be reduced to 10% of your monthly income. In most cases, the loan is forgiven after 25 years in these programs.
Depending on your situation, there may be a payment plan that best meets your needs. Visit the Federal Student Aid website and browse their lists of payment plans.
Student loan consolidation is a viable option for people with more than one student loan. If your student loans have variable interest rates and minimum monthly payments, you should look for a Consolidation Loan from the Direct Loan Program. Like traditional consolidation, a direct consolidation loan combines multiple federal student loans into one loan with one payment and one interest rate. These loans can lengthen the amount of time you have to pay off the loan, thus reducing your monthly payment. You will also get a fixed rate on your interest instead of dealing with variable rates.
Consolidation has its downsides. You may be more comfortable with the monthly payments, but you will end up paying more in the long run due to the interest rate. If your individual loans had benefits attached to them, you will lose them too.
You may not have planned to deal with student debt when you dropped out of high school. With most people he seems to sneak up on them as soon as they leave college. No matter what your student debt situation is, there are programs available to help you manage it. You deserve to focus on the future and work towards your career goals instead of worrying about monthly payments.
