There are millions of people around the country who can attribute their career success to the student loans they procured to pay their tuition fees and living expenses, among other things. Some people may have multiple student loans while others may only have a single, but substantial, student loan. While these loans are incredibly useful in helping students complete their college studies without financial constraints, most beneficiaries have to be pushed to pay back their loans.
It is important to note that while student loans can be forgiven and written off under certain circumstances, borrowers are required by law to settle their outstanding student loans regardless of their financial position. A beneficiary may want to file for bankruptcy, but student loans cannot be part of bankruptcy proceedings. So, they must be settled no matter what. In fact, only death can stop a beneficiary from paying back their student loans. Below are a few simple strategies for offsetting student loans quickly.
Pay Student Loan as You Earn
Beneficiaries of student loans who have a day job that comes with job security, or have a guaranteed long-term income, can pay back their loan through a PAYE program. Beneficiaries who are married with two household incomes can also use this option. With this payment plan, you will maintain a decent percentage of your income after all essential expenses have been deducted. After servicing your student loan for 20 years, you will be eligible for student loan forgiveness regardless of the value of the outstanding balance.
Tiered Payment Schedule
It is a well-known fact that incomes usually increase over time. Once you land your first job after graduating college, your income may be low, so your student loan deductions should not be exorbitant. The graduated payment plan allows borrowers to pay a lower amount when their income level is low and a larger sum when their incomes increase. This means that as your income increases, you can pay off your student loans faster.
Standard Repayment Option
Wealthymillionaire.com and other authority websites on financial issues indicate that borrowers have two motivating factors when repaying their loans. The first is to pay as little interest as possible while the other motivating factor is to pay the least amount of money possible every month to ensure they can settle their debts in a stress-free manner. If you would like to settle your loan fast to avoid paying exorbitant interest, you can use the standard repayment plan to offset your student loans.
With the standard repayment plan, the principal loan amount is spread out over a period of 10 years, and interest is calculated to create a structured payment plan. You’ll be required to pay fixed monthly installments throughout the 120 months. Unfortunately, these installments may be beyond your financial reach. Imagine having 100,000 dollars in student loans divided by 120 months. This means that you will have to pay over a thousand dollars every month for 10 years. If you add mortgage payments of a similar amount, you will be left with almost nothing. If you are interested in the Public Service Loan Forgiveness Program, the standard repayment plan may not be for you.
Student Loan Forgiveness
If every beneficiary of student loans could qualify for student loan forgiveness, the vast majority would apply. However, there are strict eligibility requirements. For starters, you must have an income that can service the student loan for around 20 years. After servicing the loan for this period, you can apply for forgiveness. Please note that if you chose the standard payment plan, your loan would be fully paid off within a decade, so the standard repayment plan automatically disqualifies you from student loan forgiveness. Please also note that only employees of government agencies and some nonprofits qualify for student loan forgiveness.
Refinancing
When you have difficulty servicing your loan due to high monthly installments or you’d like to lower the interest rate on your student loan, refinancing may be a good idea. Please note that refinancing only makes sense if it saves you money or makes it easier for you to service your student loans. Most lenders will be happy to refinance your loan, so you need to shop around to identify the most affordable lenders for your student loan refinancing needs.
Cash Advances
If you are unable to make your monthly student loan payment for one reason or another, it is crucial you explore all available options to ensure you do not miss a payment. One of these options is taking a cash advance or payday loan against your paycheck. This is an emergency contingency plan if things do not work out as you had hoped.
If you have a student loan, you need to understand that most student loans, especially federally insured student loans, usually come with low interest rates. This means that interest accrues slowly. Therefore, refinancing these loans using commercial loans, which come with higher interest rates, may not be such a great idea. If you took out a private student loan, you may be able to find lenders with lower interest rates. There are also nonprofits that can help you get affordable refinancing.
That said, settling your student loan fast can help you save money and will give you peace of mind knowing that your college education is fully paid up. As a result, you will be able to focus on other important financial issues.
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