If you are having a difficult time making your student loan payments you might be looking for a way to get rid of your student loans. The only way to get rid of your student loans is to pay them. However, lenders are much more likely to partner with you if you are having a difficult time making payments than they would for other types of loans. It is important to do something about your student loans now, rather than just hoping things will work out. If the interest on your student loans goes up, you can pay an even harder time to get rid of them. Your student loans can negatively impact your finances and make it difficult to save money or even pay your bills. You can use these seven steps to pay off your loans faster.
Consolidate your loans to Lower payment options
When you consolidate your loans you have the option of lowering your monthly payment by extending the loan term. Over time you will eventually have to pay more in the interest, but you can make the payment manageable and lock in a lower interest rate. Once you get into a better financial situation you can increase the amount you pay faster each month from the loan. This is a good option if you know that your income will increase over the next few years as you complete your career. Also you can continue to make payments so that the amount you owe is reduced every month. It is the first option that you should consider when trying to make manageable payment options.
Apply for income based on Student Loan Payments
You can apply for income tax based on student loan payments, if you have a low income. This option will take into account your current family size, and your income to determine the amount you need to pay on student loans every month. This will free up money so that you can cover the necessities for your family without the stress of student loan debt overwhelming you. You must re-apply to this program every year because they will continue to evaluate your income and family size. In addition, you will need to stay current on your student loan to qualify payments. After twenty-five years of on-time income-based payments, you may have forgiven the rest of your student loan balance. You need to transfer your student loans to a federal direct loan to qualify for this option, but it will be worthwhile to find relief from your current situation.
Put Your Student Loan on Procrastination
You can temporarily stop making payments on your student loans by putting it on deferment. Don’t just stop paying the loan. Contact your banker and explain your situation. The lender will fill you out a request for hardship deferment. Continue paying on your loan until you receive a notification that the deferment has been approved. This is a last resort for a moment when you no longer have a job or if you have a financial emergency. Interest rates will continue to increase while the loan is still on deferment. You have a limited number of months that you can defer your loan. Make sure you only use this option as a last resort and if you are unemployed or in a very difficult financial situation.
Why doesn’t Bankruptcy work?
Student loans are usually not considered as bankruptcy. Federal law requires that you pay back your student loan no matter what. The only exception is if you have to become permanently disabled. If you are considering bankruptcy due to your student loans, you should look for another solution, such as an extra job or a cut in your lifestyle to make ends meet. Private student loans are rarely forgiven as well. Take the time to make a debt payment plan and find a solution that will let you pay off your student loans so that you can start focusing on your retirement and wealth building rather than being overwhelmed by your debt.