If you are like me and so many other Americans chances are you or someone you know has student loans. In my case I was fortunate enough to make it through my bachelor’s degree debt free then for some strange reason I decided to pursue three master’s degrees that I intend to use while working full time at my government job. I have an MBA, an MS in Accounting and am almost done with an MS in Financial Planning. These degrees I am hoping will allow me to do some consulting while I have my regular 40 hours a week job with incredible benefits. Then when I retire from the government service at the age of 57, I will be able to do any number of things from financial planning to consulting to possibly running my own accounting business. With education, the possibilities are endless but then again it seems so is the student debt that got me all those degrees. At least if I pay my loans for ten years and stay with the government the balance at that time will be forgiven leaving me to pay for two of the three degrees. Not a bad plan if you can manage it.
But with student loans comes a myriad of payment options and the like. So where do you begin you may ask? First is only borrow what you need to use for school and nothing more if you are in a position to be taking out student loans. Then if you can pay the interest while you are in school avoiding a massive accumulation of interest payments.
One of the most underutilized programs the student borrower has been the income driven loan repayment plan that is offered. In this plan you submit paperwork to the loan servicing company and they will derive a payment plan based on your discretionary income. In many instances, this can lower the amount to 10% to 15% of what it was prior to the program. And in extreme cases it can even be reduced to $0. But the key to this plan is to re-enroll every year or be shocked when the loan payment goes back to the original amount. This can cause some serious issues for people as you can imagine. As long as you renew you should be okay, and the loan servicing companies should send you reminders of your renewal about 90 days prior to it expiring.
One main thing here does not under any circumstance pay a company to help you lower your loan amount. This can be done for free by talking to the loan servicing company or the Department of Education. Countless Americans who can already not afford their student loan payments are paying these companies to do what they can do themselves for free. It is a total rip off in my opinion and if you are already in financial distress because of these loan payments do not add to the problems or issues.
And if you extend your payments over a longer period and make 20 to 25 years of on-time payments you could be looking at having some of your loans forgiven as a public service employee. It does mean more in interest payments as the period you will be paying is longer but lower bills may offset that for you. Or consider getting a public service job and make ten years of payments for loan forgiveness.
The key is to talk to your loan servicing company and see what your options are. No one is locked into student loan debt for life, and no one should be made to live in the poor house to pay the bills of student loans. Know your rights and under no circumstance pay for help when it comes to student loans.
If you have any question or need any additional information feel free to contact me.
