Student loan debt has become something of an epidemic. These loans can be sizeable and ultimately stressful. Many young people in the United States are afraid to even make a monthly payment on their student loans. It might seem impossible to manage 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 achieve 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 don’t require a college degree.
To make matters worse, student loan lenders start harassing their “customers” right after they graduate. 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, based on 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 sounds like a rude awakening to you, I apologize. There is no easy way to make your dream job a reality and make your student loan debt disappear. However, it takes action, commitment and it is possible.
Student loans. If reading those two words makes you angry, don’t worry. Should. Paying off student loans may seem impossible, but there are ways you can help yourself. The first thing you need to do is understand what type of loan you have. Some loans are eligible for certain benefits that may help your situation.
Check the National System of Student Loan Data (NSLD). This website is the home of the US Department of Education’s database for student aid. Only federal student loans are eligible for this help. In my experience, I have talked to more people with federal loans than with private loans.
A good idea for those who are unemployed or “between jobs” is deferment or forbearance. A deferment or forbearance allows you to temporarily suspend payments on your federal student loan or temporarily reduce the amount you pay. This could be useful if you are in danger of defaulting on your loan. A default occurs when you have not made your monthly payments for an extended period of time. In case of default, the lender can take legal action to recover your money.
If you are eligible for deferment, the federal government may pay interest on your loans during the deferment period. The opposite occurs with an indulgence. In a forbearance, you may be able to reduce your payments or stop payments altogether for up to 12 months.
These options can give you room to breathe and pursue the career you studied for so long.
There are other options available to help you lower your monthly payments to a manageable level. There are income-based repayment plans for people with direct loans or loans from the Federal Family Education Loan (FFEL) Program. In an income-based payment program, your monthly payments may 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 works best for you. Go to the Federal Student Aid website and explore their payment plan listings.
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 consider a Direct Consolidation Loan. Like traditional consolidation, a direct consolidation loan combines multiple federal student loans into a single loan with one payment and interest rate. These loans can stretch the amount of time you have to pay off the loan, lowering your monthly payment. You’ll also get a fixed rate on your interest instead of dealing with variable rates.
Consolidation has its drawbacks. You may be more comfortable with monthly payments, but you’ll end up paying more in the long run because of the interest rate. If your individual loans had benefits attached, you will lose those too.
You may not have planned to deal with student debt when you were finishing high school. With most people, she 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.