How to Whack Student Loan Debt

How to Whack Student Loan Debt
  • Type: student debt
  • Opening Intro -

    You've finished your education and now the bills are starting to come in. Student loan bills, that is.

    If you're fortunate, you have a job to help pay for your loans. If not, you may be able to seek a deferment, at least for a little while.

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Congratulations, graduate! You’re now on your way to advancing your career! Trouble is, you may have a reminder of your college years hanging around for a long time and by that I don’t mean your degree. Instead, like so many other graduates, students loans amounting to tens of thousands of dollars may be on your shoulders. Here’s how to nail that debt and to get rid of it well before you have grandchildren.

1. Know what you owe. You know the full amount of student loan debt you are carrying right? Don’t laugh: many students with multiple student loans may not have that precise number. Know that the average student loan debt for those who borrowed money was $29,400 as of 2012 according to the Project on Student Debt. Find out what your total is before taking the next step.

2. The types of loans. Not all student loans are the same. Some loans are federal (Stafford) loans, others are private student loans. Even within private loans there are some variations including Parent Plus loans that are in the name of mom and dad. The latter is not your responsibility to repay unless you have an agreement with your parents to do so. If so, you’ll need some parental slack here if your income is not sufficient. The type of loan you owe may give you some flexibility when it needs to be repaid. If available, get an extended payment plan to start repaying your loan later and for smaller amounts. This will give you time to raise your earnings to handle your debt later.

3. Consolidate your debt. Certain student loans are eligible for consolidation. This means that instead of making loan payments to multiple lenders, you can make a single loan payment to one lender. The advantage here goes beyond management — you may be able obtain a better loan rate, defer your repayment, and extend your loan term. Know that this option does not apply to loans with a private lender. Shop around too — many banks offer student loan consolidation and those rates may vary.

4. Ask for forbearance. You probably know that it is nearly impossible to get a student loan forgiven. Typically, there is a vary narrow path for this as outlined by the US Department of Education. If you have a total and permanent disability, your loan may be discharged. If you die, you loans may die with you. Discharging in bankruptcy is rare, but you may be able to get some loans forgiven within certain teacher and public service programs.

5. Attack your balance. Fresh out of school you may find yourself pulled in several directions. You have a new career. You want to marry the love of your life. A new car beckons. Making a major life change at this point could prove disastrous. If you do marry, you and your spouse should be fully aware of your debt and your spouse’s debt too. If this is something that you both can handle, then marry. Otherwise, work diligently for the next year or two to reduce your respective debts.

Student Loans

Inasmuch that student loans can provide a college education where one would not be otherwise possible, the amount of debt you take on should never outstrip your ability to repay it. Once you cross that comfort line, you’ll find that it will take many years to pay off debt that may not result in the career that you wanted. Take on any debt very carefully.

See AlsoHow to Get Rid of Student Loan Debt

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Categories: Featured, Student Loans