The first form of relief is to do a refinance. If it’s a private student loan, it can sometimes be refinanced to get a lower interest rate. There is also deferment and forbearance, two programs that allow you to pause your payments for a certain period of time. In deferment, no interest accrues during the time that you are not paying, whereas with forbearance, the interest continues to build on the loan. You’ll end up owing more in a forbearance situation than you would have had you deferred the loan, and there are different requirements for being able to do either of those. There are also different kinds of income-driven repayment plans. Essentially, the program you would qualify for depends on what kind of loan you have, but typically, you pay a percentage of your discretionary income into a plan for a period lasting between 20 to 25 years. After that period of time, if you’ve made all of your payments, the debt is forgiven. Some borrowers in certain professions might be eligible for public service loan forgiveness. If they make ten years of payments…Read More
The U.S. student loan debt is characterized as a debt crisis in this country. Currently, about 45 million Americans hold more than $1.7 trillion in student loan debt. Of that, about 92% is backed by the American taxpayers. Cumulative student loan debt is the second largest category of consumer debt after mortgages, which struck me as being pretty crazy. While tuition is what we normally think of with student loan debt, there’s also the cost of other things that students need, such as housing, food, books, and supplies, and all of those things go up in price every year, which contributes to the problem. It’s not a simple issue, but there is some movement to try to fix some of the problem. Because it’s impossible for people to escape student loan debt in most cases, the lenders that offer the student loans have little motivation to assess the creditworthiness of the people that they lend to. In other words, the lenders don’t need to underwrite these loans as they would if they were assessing someone for a mortgage, for example, where they would look at…Read More