Almost everyone dreams of a loan free life! If you are one of those people, hunting for strategies that would eliminate or at least reduce your student loan; consider yourself as lucky! In this short write up, you will come across six feasible options that will help you pay away student loans like a pro!
Tip #1 – Using Hardship Plans
If you are financially unstable or with a very high debt, you can make use of the following plans:
- Income Contingent Reimbursement Plan – This is for borrowers with the Federal Direct Loan. ICRP computes the amount you should pay based on your monthly income. If you fail to reimburse the loan fully even after 25 years, the government will cancel the remaining amount.
- Income Sensitive Repayment – As suggested by its name, the monthly payment is determined by your income and family size! Borrowers with low incomes and big families will be allowed to pay a smaller amount every month!
Tip #2 – Using Smart Reimbursement Plans
If you don’t qualify for the foremost financial hardship plans, you must reconstruct your reimbursement plan carefully. You can decide on graduated repayment schemes that will let you make smaller monthly payments that will gradually increase. On the other hand you can extend your loan by another 15 years! (Most student loans are for 10-years period)
Tip #3 – Using Loan Consolidation
You can get rid of multiple loans by consolidating them to a single big one! This is a method used by many students. Loan consolidation will help you reduce your interest rate. It is a perfect plan for those who don’t qualify for other reimbursement schemes.
Tip #4 – Deferring Long Loans
Unemployment, returning to college, economic crises and family troubles are few reasons you can use to defer student loans. Generally, subsidized loans will not incur any interest during the actual deferment period. The possible deferment period will depend on the lender’s policy. Before you defer any student loan, remember to go through the lender’s terms and conditions.
Tip #5 – Using Loan Forbearance
Some borrowers consider loan forbearance as the best way of handling student loans. Loan forbearance lets the borrower stop making monthly payments for some time or the lender reduces the borrower’s monthly payments temporarily. Individuals with health problems, bad financial status and personal problems qualify for loan forbearance. Additionally, if your monthly payments are 25% more than your income, you can make use of loan forbearance.
Tip #6 – Cancelling Loans Completely
Do you know that you can cancel student loans completely? This is also known as discharging of student loans. To get rid of the financial burden completely, you must be affected by any one of the following circumstances:
- The college you enrolled closed down.
- The college you owed money, refused to agreed to cancel your payments.
- The college didn’t verify if you were qualified enough to attend the program. Experts term this as false certification.
- You were not able to work or earn a living due to serious health problems.
- You work in public sector jobs like nursing, teaching and the military.
- If the borrower dies, the student loan will be cancelled permanently.