If you have a hard time paying student loans, you may be looking for a way to get rid of student loans. The only way to get rid of student loans is to pay them off. However, lenders are much more likely to work with you if you have a difficult time making payments, then they would be for other types of loans.
It’s important to do something about student loans now, instead of hoping things will go away. If interest rates on your student loans go up, you may have a harder time paying them off. Your student loans can negatively affect your finances and you may find it difficult to save money or even pay your bills.
You can apply these seven steps to pay off your loans faster. You should take these steps as soon as you realize that you are having a difficult time repaying your loans.
Consolidate your loans for fewer payment options
When you consolidate your loans, you have the ability to reduce your monthly payment by extending the life of the loan. Over time, you will end up paying more in interest, but you can make management payments and lock in at lower interest rates.
When you are in a better financial situation, you can increase the amount you pay each month to pay off your loan faster. This is a good option if you know that your income will increase over the next few years as you advance your career.
It also allows you to continue making payments so that the amount you owe is reduced each month. This is the first option to consider when trying to find possible payment options.
Application for student loan payment based on income
You can apply to pay student loans on a revenue basis if you have low income. This option will take into account your current family size and your income to determine the amount you will have to pay each month on student loans.
This will free up money so you can cover the needs of your family without the stress of the student loan debt that overwhelms you.
You will need to re-submit this program every year as they will continue to evaluate your income and family size. In addition, you will need to stay current on your student loans for qualification.
After twenty-five years of income-based payments, you can forgive the rest of your student loan. You will need to transfer student loans to a Joint Direct Loan to qualify for this option, but it will be worth it to find relief from your current situation.
Put a student loan on hold
You can temporarily suspend making student loan payments by putting it on hold. Do not simply stop paying the loan. Contact your lender and explain your situation. The landlord will fill out your application for disposal. Continue to pay off your loan until you are notified that your loan has been deferred.
This is the last solution when you no longer have a job or have a financial situation. Interest will continue to accrue while the loan is still on hold. You have a limited number of months in which you are allowed to put your loan on hold. Be sure to use this option only as a last resort and when you are unemployed or in a very difficult financial situation.
Why won’t bankruptcy work?
Student loans are not usually considered bankrupt. Federal law requires you to pay back your student loan regardless. The only exception is if you become permanently disabled.
If you are considering bankruptcy because of your student loans, you are looking for a different solution, such as extra work or a reduction in your lifestyle in order to reach the goal.
Private student loans are rarely forgiven. Take the time to come up with a debt repayment plan and find a solution that will allow you to pay off your student loans so you can start focusing on retirement and wealth-building instead of being overwhelmed by debt.