When You Can’t Pay Back Student Loans

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Can’t Pay Back Student Loans?

The U.S. Department of Education offers a number of affordable repayment options for borrowers who are struggling to or Can’t Pay Back Student Loans. If you ever have questions or need advice on how to Pay Back Student Loans, you can always contact the Department of Education directly.

1. Switch To A Repayment Plan:

You may be able to lower your monthly student loan payment by switching to a different repayment plan. Use a student loan repayment calculator to compare what your monthly payment amount could be if you switched plans. Remember, If you don’t choose a different plan when entering repayment though, you are automatically enrolled in the 10-year Standard Repayment Plan. So you need to make sure you are able to afford the new payment!

One of the most popular options for borrowers who Can’t Pay Back Student Loans are the income-driven repayment programs.

The main income-driven repayment plans are:

– Pay As You Earn

– Income-Based

– Income-Contingent

 

Benefits:

Your monthly payment in these programs will be only a percentage of your income. Depending on the plan, that may be 10% or 15% of your discretionary income, or something else. What you ultimately Pay Back depends on the plans you choose, when you borrowed ETC but it will definitely be something lower and more affordable. In fact, it could be as low as $0 per month! Then any remaining balance on your loans is forgiven if your federal student loans are not fully repaid at the end of your repayment period (20 or 25 years).

Income-driven repayment plans are a great option if you Can’t Pay Back Student Loans debt. However, like all benefits, they come at a  cost….These benefits will ultimately increase the amount of interest you pay over time. The income-driven repayment plans also have tax consequences for any loan Forgiveness received.

Apply for an income-driven repayment plan now

2. Consolidate your Student Loans:

Loan consolidation can simplify your payments by combining multiple Federal student loans into just one loan. Consolidation can also help lower your monthly payments.

 

Benefits:

Can lower your monthly payment by extending your repayment period (spreading your payment out over more years). The repayment term ranges from 10 to 30 years, depending on the amount of your consolidation loan, your other education loan debt, and the repayment plan you select.

If you have FFEL or Direct PLUS Loans, consolidating your loans into a Direct Consolidation Loan will allow you to qualify for additional repayment plans, such as the Pay As You Earn or Income-Contingent Repayment Plans. It’s important to note that consolidation will lock-in interest rates on variable-rate loans, but will not lower them further. This would be a benefit if, like now, interest rates are low.

The benefits listed could provide relief to many borrowers, However, it’s important that you also weigh the costs before consolidating. For example, because you’re restarting and possibly extending your repayment period, you’ll pay more interest over time. Additionally, you may lose borrower benefits, such as interest rate discounts and loan cancellation benefits, offered with the original loans.

Apply for a direct consolidation loan now

3. Postpone your Payments:

Under certain circumstances, you can receive a deferment or forbearance that allows you to temporarily postpone or reduce your federal student loan payments. Deferment and forbearance may be a good option for you if you are temporarily having a difficult time to pay back student loans. However, Deferment and forbearance are not good long-term solutions. If you think you’ll have trouble paying back your loans for more than a year or you’re uncertain, you should consider an income-driven repayment plan or consolidation.

 

Benefits:

You do not need to make student loan payments during a deferment or forbearance. The Federal Government may pay the interest on your loan during a period of deferment. This depends on the type of loans you have. Again, deferment and forbearance are not good long-term solutions for borrowers who are struggling to pay back their student loans.

Some reasons why:

– With a deferment, interest will continue to be charged on your unsubsidized loans (or on any PLUS loans).

– With a forbearance, interest will continue to be charged on all loan types, including subsidized loans.

The interest you accrues during periods of deferment or forbearance may be capitalized (added to your principal balance), and the amount you pay in the future will be higher. If you can, you should consider making interest payments on your loans during periods of deferment or forbearance. If you need help deciding which of these options is best for you, Your Loan Servicer should be assisting you. However, we all know that sometimes they seem like they don’t have your best interest in mind.

 

So if you want a second opinion or would just like some more information. Book an appointment to speak with a “Guidance Counselor” Today

 



 

See What Your Options Are


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