In paying off student loans, one can use many approaches. While a borrower might consider a repayment plan hinged on income to take care of their monthly bill, another might consider deferment to postpone their payment while someone else makes extra payment to make the debt end up on time.
This article explores several strategies with which one can manage student loans without going broke or defaulting.
Consider making extra payments every
Susan Benson graduated from college with a loan of $30,000. However, she paid the loans off in three years rather than the typical ten years route. Susan made extra payments every month, which shortened the loan period tremendously.
This can only happen when you tremendously cut your spending and direct it to the student loan. Susan directed everything, including savings which helped get rid of the loan on time. Making the extra payment is a sure way to get out of debt as soon as possible.
Pause payment while Job Hunting
Extra payment towards your student loan is reasonable, so you are debt-free asap. Sadly, however, not everyone can afford this approach. The truth is many people even struggle to make the minimum payment required of them every month.
In this case, payment postponement via forbearance or deferment might be the best approach. Pausing of payment helps indeed, although you should expect some downsides. For instance, such a loan will keep accruing interest, except it is subsidized, which means a more significant balance once you resume payment.
While this is a terrific option, ensure you come to terms with the downsides.
Consider Income-based Repayment
Income-based repayment is an income-driven plan that classifies the monthly bill based on what one makes per month. While it is a factor of the borrowing period, this plan might cap one payment at 10, 15, or 20% of your income. The bright side is that you can be forgiven of any balance you have after 25 years of prompt payment.
The reduction of a monthly payment can make it easier to achieve your goals.
Consider Public Service Loan Forgiveness
Another option from the federal government that can wipe out student loans entirely is the Public Service Loan Forgiveness. With this program, borrowers can be forgiven of any portion of their loan left after making 120 payments that qualify.
You can also qualify for Loan forgiveness via some income-driven plans, in which you qualify for forgiveness after working in any qualifying institution for ten years. This involves governmental positions or jobs at a 501(c)(3) firm.
Consider a Moderate Lifestyle
You might consider getting more jobs, making more payments and all to get rid of your loan on time. However, without the discipline to taper down your expenses, it will not work.
With more funds will come the temptation to inflate your lifestyle and get the latest gadgets and wears. However, with a laser focus on getting your debt off the table, it will be possible.
As a result, paying your debt should be your utmost financial priority. Consider it as a temporary inconvenience to allow you to enter future financial freedom.
Consider the best options for your Loan Repayment Plan
There is no general solution in taking care of student loans as everyone has a unique financial situation. As a result, what works for Susan might not work for Madison.
For people struggling with their bills, consider deferment, forbearance or an income-based plan as it could help you avoid default.
Also, if cutting your monthly expenses or getting an extra job seems feasible, why not? Some additional payments every month could speed up your trip to becoming debt-free.
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