Like most international students who’ve studied abroad, you’re mostly dealing with a fair bit of student loan debt yourself. Perhaps you were awestruck when you realised you had such a high student loan payment or maybe you’re stuck in an unfortunate low- paying job.
We can tell you one thing for sure - you are not alone when it comes to struggling with student loan debts. It was recently found in American Student Assistance reports that out of every five student loan borrowers, two are late on their student loan bills within the first five years of repayment.
Maybe you aren’t late on making your student loan payment but are still feeling crushed- don’t let a loan take over the quality of your life. Here’s what you need to do.
How You Repay!
As you enter repayment, you will be signed up for what is known as the standard repayment loan automatically. This standard plan will set up your repayment within a maximum period of ten years with a minimum payment of $50 per month. This may be a good loan which is designed to get you out of debt really soon but you might have to make high payments from the very beginning. If this doesn’t work for your budget, then consider these:
- Graduated Repayment: This plan starts with lower payments that are designed to increase every two years. You will still be paying back the loan in ten years, but with lower payments initially.
- Extended Repayment: As the name suggests, your loan will have to be paid back in an extended period, for up to 25 years, with a fixed or graduated monthly payment. Students will pay more interest this way but it’s a simple way to reduce monthly payments.
- Income-based, Income-contingent, Income-sensitive and Pay as you Earn: These plans are going to be based on your income. If you are expecting your income to fluctuate through the next few years, this should be the plan of your choice. You should keep in mind that these are based on different formulas each, but follow a common basic concept.
One Too Many!
It is often seen that students end up taking a handful of student loans and may be from many lending entities or from the same one to pay for different years of your study. Taking five to ten loans can not only be a confusing affair but can turn out to be a rather expensive one as well.
If this is the case you find yourself in, then you may want to consider student loan consolidation which will often result in a lower student loan payment, with a predictable and fixed interest rate. This is considered a good option for lowering your payment rate without extending the time period of repayment.
Time for a Screeching Halt!
If you are financially struggling, then you can apply for forbearance of deferment on your loan. They both will let you take a break from the responsibility of having to pay student loans for a set time period. It may be easier to qualify for forbearance but you will have to keep in mind the interest; deferment would be the better of the two options as it doesn’t pose any interest. Talk to your student loan servicer right away if you have lost your job or are facing some other financial difficulty.
Forgiven and Forgotten!
In a few cases, students will be able to have their student loans discharged or forgiven. Teachers and public servants, for example are eligible for such loan forgiveness after a few years of experience. If you are unemployable, due to a disability, it is most likely that your student loans may be discharged.
If you have taken out private student loans and are facing any difficulties with repayment, confront your lender and explain your situation to work out a solution that would be beneficial for you as well as the lender.
This is how we advise you to face your student loan situation. Know how to make the most of the available alternatives and start living a quality life now!