What To Do If You're A Student In Debt

For far too many people who are in college or who have graduated, the financial burdens of paying for your education have been tremendous.  Even more frustrating than paying for school is the issue of taking out a student loan only to find yourself unable to handle repaying that loan.  When a student is in debt, it can hinder their experiences – whether they are spending valuable study time or leisure time concerned about paying off a loan (or having to spend time working in order to do so), or whether they are unable to take time to search for the career of their dreams after college because they have to get immediate money to start paying off loans.  How many graduates are stuck in jobs they’d rather not be doing – and may not even reflect their skill set – just to get loans paid off??  If you’re a student in debt, then there might be some ways to help you find a way out of this money maze you find yourself in.

One of the remedies available to students who are looking for ways to get out of loan debt is to consolidate any loans they may have taken out.  There are new guidelines for consolidation that have made it a bit easier to roll all your loans up into one payment.  As of July 1, 2008, interest rates for Stafford Loans now range from 3.6% to 4.25%.  Rates on PLUS loans taken out by grad students can be roughly 5.13% so long as they’re part of a consolidation package.  These new rates are thanks in part largely to the effects of the recent credit mess.  With things tightening up, private loan companies such as Sallie Mae are pulling out of the consolidation business.  Therefore, the department of Education has jumped in to help, by providing these reduced rates to students in debt.

One caveat:  Unless this was a federal government loan, or a variable-rate loan, or is two years old (having been made prior to July 1, 2006) – then you’re out of luck, as these lower rates are non-applicable as far as consolidation by way of the Department of Education.  Plus, you can only consolidate once; if you’ve done so before, you aren’t eligible.

If you’re in need of paying your loans off and can’t seem to find a way to do so, you can still talk to counselors and formulate a plan for repaying the loans.  One option available is to work with a graduated schedule – which means that your repayment is tailored to the likelihood that you will grow financially as your career goes along…so larger payments are set for the future, when you have more assets with which to put in the funds.  Another way to do this is with what’s called income sensitive repayment.  This is based on monthly income and it’s relation to your debt.  But this plan can be the most expensive when all is said and done; plus, you must reapply each year for this plan.

It is also possible to get forgiveness for a loan debt, if you meet certain criteria – like being in military service, or some other form of volunteerism or public service.

If you are a student in debt, there are many different ways you can handle the problem – and get the relief you definitely need.

 

 

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