How to Get Out of How to Get Out of Student Loan Debt Student Loan Debt

Student loan debt defaults are at an all Student loan debt defaults are at an all time high and are only going higher. In time high and are only going higher. In 2010 the default rate was at a staggering 2010 the default rate was at a staggering 7%, one year later...8.%. 7%, one year later...8.%.

These astronomical default rates will only These astronomical default rates will only go higher as the economy stagnates and go higher as the economy stagnates and people struggle to make the payments. people struggle to make the payments. But still there are others who are making But still there are others who are making the payments and who are getting out of the payments and who are getting out of student loan debt. student loan debt.

Federal or Private?Federal or Private? Pay off your private student loans first. Pay off your private student loans first.

Interest rates, even though low now, may rise Interest rates, even though low now, may rise in the future. You also will not have the in the future. You also will not have the protections offered you through federal protections offered you through federal student loan programs. You must keep your student loan programs. You must keep your federal student loans current though. federal student loans current though.

Once You’ve paid off the private loans, Once You’ve paid off the private loans, consider adding that payment amount to your consider adding that payment amount to your federal loans. This will not only pay the loans federal loans. This will not only pay the loans off sooner but will save you money on interest.off sooner but will save you money on interest.

Can’t make the payments?Can’t make the payments? If you are struggling to make the payments on If you are struggling to make the payments on

your student loans, consider having the loan your student loans, consider having the loan terms extended. This will lower your monthly terms extended. This will lower your monthly payment but bear in mind, you will probably payment but bear in mind, you will probably more than double the interest you will pay. more than double the interest you will pay.

Also, before you default, keep in mind that Also, before you default, keep in mind that there are no statutes of limitations on federal there are no statutes of limitations on federal student loan debt. Also, there is no bankruptcy student loan debt. Also, there is no bankruptcy protection. The creditor can and will continue protection. The creditor can and will continue to collect the debt long after you have to collect the debt long after you have defaulted.defaulted.

Income based repayment Income based repayment plansplans

There are three repayment plans There are three repayment plans that are tied to your income: income-that are tied to your income: income-contingent, income-sensitive and contingent, income-sensitive and income-based. One of these plans income-based. One of these plans may be a viable option for you if you may be a viable option for you if you are having trouble paying your loans. are having trouble paying your loans. Some of the plans may take your Some of the plans may take your payment down to $0.payment down to $0.

Student loan forgiveness Student loan forgiveness optionsoptions

There are several ways to have your There are several ways to have your federal student loans forgiven. If you are in federal student loans forgiven. If you are in one of the income-based repayment plans one of the income-based repayment plans and you meet certain income stipulations, and you meet certain income stipulations, your debt may be forgiven after 25 years if your debt may be forgiven after 25 years if you stay current on your payments.you stay current on your payments.

Your debt may be forgiven in as little as 10 Your debt may be forgiven in as little as 10 years if your are in one of the income-years if your are in one of the income-based repayment plans work in certain based repayment plans work in certain public service jobs, including teaching, public service jobs, including teaching, health, military and public safety jobs. health, military and public safety jobs.

The military offers plans for student loan debt The military offers plans for student loan debt forgiveness as well as certain high-need forgiveness as well as certain high-need occupations such as doctors and nurses. occupations such as doctors and nurses. Teachers may also have options for student Teachers may also have options for student loan forgiveness.loan forgiveness.

Forbearance may be an option. This will allow Forbearance may be an option. This will allow you to stop making payments for a specified you to stop making payments for a specified amount of time. The interest will continue to amount of time. The interest will continue to accrue however. If you are in financial accrue however. If you are in financial difficulty, you can ask for a forbearance to difficulty, you can ask for a forbearance to buy you time to get your financial situation buy you time to get your financial situation under control. under control.

Bankruptcy won’t helpBankruptcy won’t help You will not be able to have your federal You will not be able to have your federal

student loans forgiven through bankruptcy. student loans forgiven through bankruptcy. Your only options are to pay the loan Your only options are to pay the loan (whether modified, forgiven, or with regular (whether modified, forgiven, or with regular payments) and default. It is not payments) and default. It is not recommended you default on your student recommended you default on your student loan debt.loan debt.

In summary, the best option is to own up to In summary, the best option is to own up to the fact that you owe the debt and make the fact that you owe the debt and make every effort to make the payments. If you every effort to make the payments. If you find you can’t, contact the student loan find you can’t, contact the student loan guarantor immediately guarantor immediately