Are you having difficulties in paying your student loan? Do you think that it is impacting your mental and physical health? You are not alone. Many are going through this phase. It would help if you acted intelligently to minimize the stress and pay your loan on time. You might find it a bit hard due to your ongoing financial trouble. However, there are many ways to cope with student debt. You will have to research all the possibilities. After thorough research, you will find yourself in a better position.
Focus on your current financial health. Try your best to minimize your expenses. You need to pay your student loan on time. Otherwise, the consequence can be severe. You will have to avoid such a condition. You might be thinking about how to do this. We will help you with some practical suggestions. Keep reading to find ways to cope with student debt.
Try to Avoid Any Default
Your objective is to avoid any default payment. You will have to avoid any delay to prevent dire consequences. When the delay is for ninety days, you will be considered delinquent. Nine months delay means the borrower has defaulted, and its consequence is going to be severe.
Another thing is that you cannot wipe away your student debt through bankruptcy. The option is not there. The loan will chase you throughout life. Some find it hard to deal with the ongoing troubles. As a result, they experience stress and anxiety. So, it would be best if you avoided all these negative impacts by acting smart.
As stated earlier, you cannot escape, and you should not think from that angle. When there is a temporary financial crisis, you can suspend your federal loans for a time limit. The downside is that you will have to pay more on the interest.
Are There Repayment Options for Student Debt?
Yes, you can consider repayment options when monthly payments are considerably high. You can temporarily suspend your federal loan. Alternatively, you can consider repayment options. There are different types of repayment plans. A few of them are Pay as You Earn, Income-Based Repayment, Income Contingent Plan, and Revised Pay. You can choose any of these options.
A repayment plan will reduce monthly payments. Also, it can stretch out your debt for a longer period. Your monthly income is the main factor in deciding the repayment plan. Therefore, you will not have to be worried about a late payment or default payment.
Consequences of the Default or Late Payment
For a late payment, you need to pay a late fee of six percent on your federal student loan. In addition to the late fee, the government might deduct twenty-five percent of your every payment as the collection fee. It is going to make your student debt even more expensive.
Your credit report will reflect the missed or late payments. It will remain on your report for seven years. Therefore, you might not qualify for any loan during this period. If you find it hard to make payments, you can ask for forbearance or deferral. Both these will not harm your credit score.
How to Pay Your Student Debt
You are here means you are having difficulties in paying your student debt. Your financial condition is not allowing you to make monthly payments. During a financial crisis, you can try the following for coping with student debt.
Consider the Grace Period
Your lender is going to offer a grace period once you become a graduate. The grace period will vary from six months to one year. After this, you will have to start repaying your loan. You will have to prepare yourself for the repayment within the grace period.
There are different types of student loans. You need to visit the National Student Loan Data System to know more about the repayment options for a particular loan type. You can also get a free copy of the credit report. It will help you to understand the future payments and lenders. Understand the loan and research the repayment options. After this, you can choose a repayment plan that suits your budget. You should know your loan qualifies for loan forgiveness, deferment, or a suitable repayment plan.
If it is not possible to make payments from your monthly income, you should try working overtime. When overtime is not an option, you can start some part-time business or join any part-time job. By trying all these, you can make money for your loan.
Ask for Loan Forgiveness
You can ask for loan forgiveness while joining your new job. Some employers might offer your student debt payment as a bonus. If you have this offer, you should prefer that job. Some government jobs might enable you to qualify for loan forgiveness. There will be some minimum eligibility criteria. Know the eligibility requirements to make sure that you qualify for one.
Go with Auto-Debt
If you consider an automatic payment plan, some lenders might lower your interest rates. By going with this option, you can avoid missed payments and late payment fees.
Avoid Additional Expenses
Many make a mistake by spending much on their credit card. Some even consider another loan after joining a new job. You will have to avoid all these until your student debt is paid. You might need to sacrifice some of your interests during the initial years of your job.
Student debt can be frustrating. Any delay will affect your credit score. You should try all the ways mentioned above to avoid default. You will have to do proper research about the possible repayment plans or other alternatives before considering late payments or default. If you are having difficulties in deciding, you should take the help of experienced professionals. They are the best persons to guide you accordingly. They can help you to minimize the impact. Contact the right people at the right time to prevent any severe consequences.