22 Aug Hacks To Help You Pay Your Student Loans
Student loan debt has been one of the biggest threats to the American economy in recent years. Latest data published on the Federal Reserve website shows that the money that university graduates owe to federal and private loaners has climbed to $1,3 trillion. This is much more than the amount of money Americans owe for car loans, credit cards or home-equity lines. This is not strange at all if we take into consideration the age of debtors and huge interest rates that go from 4% for subsidized federal loans to an astounding 12% for certain private loan offers.
Most young Americans who have problems with making payments decide to postpone real estate or car purchase as well as starting a family, which is already a growing trend among young generations. Luckily, even student loans come with ways for easier repayment. In this article we have reviewed some of the best hacks and forgiveness offers for student loan debtors.
Apply for Debt Forgiveness or Discharge
Student debt can be forgiven or discharged only in certain cases. One of those cases is when a graduate declares Chapter 7 or Chapter 11 personal bankruptcy. Technically student debt can be discharged in case of personal bankruptcy, but the discharge process is much more complicated than the ones for other kinds of loans. In case of bankruptcy this type of debt can be discharged only if a bankruptcy court determines that repaying the debt will cause an undue hardship for the debtor, which happens really rarely.
Student loan debt can also be forgiven in certain cases. If a debtor decides to become a teacher in a low-income high or elementary school, and works there for five consecutive years, up to $17,500 of the debt can be forgiven for subsidized federal loans. A similar procedure is available for graduates who find work in Public Services, but they need to pay at least 120 monthly payments, and the remaining balance of their debt will be forgiven.
Perkins Loans come with different discharge, cancellation and forgiveness conditions. Forgiveness of these loans is available for graduates that serve in some of the following institutions and programs:
- Peace Corps or ACTION Programs
- Low Income High or Elementary Schools
- US Army (only for those who serve in hostility areas)
- Nursing in Different Kinds of Health Institutions
- Law Enforcement
- Head Start Program
- Child or Family Services
- Early Intervention Services
Changing Repayment Plans
Most federal and private loan debtors can choose from several different student loan payment plans. Many people are not familiar with the fact that they can change their plan and make it more customized. One of the best options for low income graduates are income based repayment plans. These were created to reduce monthly payments of low income debtors and they depend on the debtor’s income from the previous year. Graduates that have incomes that are below the poverty lines, don’t need to pay anything and their debt can be forgiven after 20 or 25 years.
There are several places in the United States that offer help with student loan debt to graduates who decide to move into their city, county or state. One of them is the Kansas Rural Opportunity Zones that offers debt forgiveness and free land for graduates that want to move to one of the Rural Opportunity Zones in this state. There’s also the Move to Niagara Falls program that guarantees $7,000 student debt forgiveness for graduates who want to move to this city and live there for more than two years.
Debtors who are ready to relocate to rural areas and work in certain sectors with staff deficiency, have few other programs they can use. New York state offers full loan forgiveness for young people who are ready to work on a farm for more than 5 years in some of the rural areas of this state. A similar program is funded by the USDA which offers $75,000 in tuition reimbursements for students who are ready to work as veterinarians in undeveloped areas for three years.
Although student loans come with much tougher conditions than other household loans, these and many other forgiveness and discharge programs make it much more attractive for open-minded students who are ready to leave their comfort zone, which is actually a bargain considering that without these loans many students would never enroll into college.