How do I get out of school loan debt? This seems to be one of the frequently asked questions on the lips of every student borrower out there. Education is free, but sometimes it really can be a luxury and not many can afford it, unfortunately. And in this post, I will be giving out some very useful tips for borrowers who need them to get out of their school loan debt.
How Do I Get Out Of School Loan Debt
Many students pile up debts in their pursuit of an education hoping for a better future, but one thing you should know is that many graduates have difficulty in paying back their loans. Repayments of loans as you should know may take up several years of your life and may also require a consistent flow of income.
And while forgiveness options may be available to students, there really is no simple way out of the situation of student loans without paying back. And with that, I have put together a couple of helpful ways to help you eliminate student loans.
President Biden’s Loan Forgiveness Plan
Under the Biden-led administration, you may get to qualify for up to $10,000 in student loan debt forgiveness if it is that you make less than $125,000 annually. And if you qualified for a Pell Grant during your education, that very amount might just double to $20,000 in debt forgiveness.
It is very important to remember that many legal challenges have been brought against the plan, thus complicating and delaying the rollout. Applications for student loan debt forgiveness have been paused for the time being until the legal challenges are all resolved.
And right now, here are various ways you can get out of student loan debt.
Check Your Eligibility Status for Student Loan Forgiveness
The federal government as you should know offers many debt forgiveness programs that may help you in the long run in eliminating some or even all of your federal student loans. And with that being said, here are some of the federal programs that you may qualify for;
Public Service Loan Forgiveness (PSLF)
Under the PSLF program, federal student loan debt may just be forgiven after ten years for public sector employees, and this is including government and nonprofit workers. In order to find out if you work for a qualifying employer and generate your PSLF form, you should make use of the Federal Student Aid’s PSLF Help Tool.
Total and Permanent Disability (TPD) Discharge
Disabled borrowers may get to qualify for total forgiveness of their student loan debt. And based on existing data from the Social Security Administration, the Department of Education identifies eligible TPD beneficiaries automatically. Plus, you can also apply for Federal Student Aid (FSA) here simply by providing the documentation of your doctor.
Closed School Discharge
Sometimes, you may not have enough to repay your student loan debt if you were enrolled in a school that closed while you were there or even shortly after you graduated. A closed school discharge will be available only in the event that you meet specific criteria and also apply to the Education Department. Some loans discharge automatically and if this is the case with you, your loan servicer will notify you.
Take Advantage of Income-Driven Repayment Plans
Income-driven repayment plans as you should know calculate repayment amounts as per a percentage of your discretionary income. The payment percentage as you should know may vary, but depending on the plan, income, as well as family size.
Refinance Your Student Loans at a Low Rate
When you get to refinance your student loans, then you take out a private loan to pay off the balance of one or more of your loans. It is ideally a very good idea to refinance to a lower interest rate, which could at the end of the day help you to pay off debt more quickly and then save you hundreds in interest charges.
You can also refinance your student loans privately but however depending on your loan amount, repayment term, debt-to-income ratio, as well as your credit history. An excellent credit score as well as a low debt-to-income ratio will qualify an applicant easily for lower rates than the applicant with bad credit and high debts.
Consolidate Your Multiple Student Loans
If it is that you are looking to lower your monthly payment amount or just get access to federal forgiveness programs, then you should know that direct consolidation loans let you to consolidate (combine) your student loans. The Direct Loans and FFEL Program Loans in question qualify for consolidation under many federal student loan programs.
If you get to combine loans, they cannot be reversed after a Direct Consolidation Loan is already issued. Further, consolidated loans are considered to be paid off and they no longer exist.
Slash the Principal by Paying Extra
In general, you can pay the lowest amount toward your student debt without getting to incur late fees as well as other penalties simply by paying your student loan payment each month. Any additional payment that you get to make on top of your monthly payment will directly lower your principal balance. And as a result, you will reduce your debt and then pay off your loans quicker.
In order to ensure that your additional payment goes toward the principal and instead of your future payments, you should notify your loan servicer in writing.
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