Vanessa
How can i afford my school loans?
#LOANS #SCHOOL #money
3 answers
Kevin Hsu
Kevin’s Answer
Repaying loans requires discipline & sacrifice. Setting out a budget for yourself can make repaying the student loans much less daunting. It's not a race to repay your loans. It's your own personal journey. Work with the student loan company to set out a payment plan and work towards it. As your income increases, you can increase your payments and pay it off faster.
Allison Shobe
Allison’s Answer
This is a perfect question. It is one I should have asked before I took out loans!
You definitely want to think about how much you are taking out before you take it, and use the money wisely. Having said that, there are multiple options for loan repayment, at least for Federal student loans. I have grabbed a description of repayment options from Penn State's financial aid page:
Standard Repayment
The standard repayment option for Federal Direct Loans amortizes the repayment evenly over a ten year repayment period.
Extended Repayment
Borrowers who borrowed their first student loan in October of 1998 or later are eligible to select an extended repayment term up to 25 years, dependent upon the amount they have borrowed.
Income Contingent Repayment (ICR)
Under this plan, your monthly payments will be calculated on the basis of your adjusted gross income (AGI, plus your spouse's income if you're married), family size, and the total amount of your Direct Loans.
The maximum repayment period is 25 years. If you haven't fully repaid your loans after 25 years (time spent in deferment or forbearance does not count) under this plan, the unpaid portion will be discharged. You may, however, have to pay taxes on the amount that is discharged.
Income Based Repayment (IBR)
The Income Based Repayment plan calculates your monthly payment as a percentage of your income. The IBR option results in a smaller monthly payment than a borrower would have under ICR.
New Income Based Repayment
The New Income Based Repayment (New IBR) option affords student loan borrowers the opportunity to have the monthly payment on their federal loans calculated as a percentage of available income rather than being dependent upon the amount borrowed. This option is available only to those borrowers who borrowed their first Direct Loan on or after July 1, 2014.
Pay As You Earn
The Pay As You Earn (PAYE) option affords student loan borrowers the opportunity to have the monthly payment on their federal loans calculated as a percentage of available income rather than being dependent upon the amount borrowed. The PAYE option results in a smaller monthly payment than a borrower would have under ICR or IBR.
This program is available only to those borrowers who did not have an outstanding Federal Stafford or PLUS Loan balance as of October 1, 2007 and who also received a new disbursement from a Federal Direct student loan on October 1, 2011 or later.
Revised Pay As You Earn
The Revised Pay as You Earn (REPAYE) option affords student loan borrowers the opportunity to have the monthly payment on their federal loans calculated as a percentage of available income rather than being dependent upon the amount borrowed. This option is available to all Federal Direct loan borrowers who have not borrowed a Parent PLUS Loan.
Consolidation
Consolidation offers the borrower the opportunity to combine together any federal student loans into one consolidation loan. The consolidation loan will have a longer repayment term and a slightly higher interest rate (based on the interest rates of the loans included in the consolidation), which results in a lower monthly payment. Consolidation is often a good option for borrowers who have multiple lenders and wish to make their repayment less complicated. Borrowers can learn more and start the consolidation application here.
Public Service Loan Forgiveness
Public Service Loan Forgiveness can be a relief for public service employees who carry significant federal student loan debt. This program allows any student loan borrower who has made 120 qualifying payments on their Federal Direct Student Loans while working full-time in public service work to have the remaining balance of the loan forgiven.
James Constantine Frangos
James Constantine’s Answer
Strategies to Manage Your Student Loan Debt
To manage your student loan debt effectively, you can put into practice the following strategies:
1. Develop a Budget: Begin by crafting a comprehensive budget that delineates your earnings and expenditures. This will enable you to track your spending and pinpoint areas where you can reduce expenses to allocate more funds to your loan repayments.
2. Investigate Income-Based Repayment Plans: If you have federal student loans, you might qualify for income-based repayment plans. These plans modify your monthly payments according to your income, making them more affordable.
3. Explore Loan Forgiveness Programs: Research loan forgiveness programs that might be accessible depending on your area of study or career path. These programs can help diminish or erase your student loan debt over time.
4. Refinance Your Loans: If you have private student loans with high interest rates, think about refinancing them to obtain a lower rate. This could potentially save you money on interest throughout the duration of the loan.
5. Find Additional Income Streams: Think about getting a part-time job, freelancing, or initiating a side business to boost your income and contribute more money towards paying off your loans.
6. Prioritize Loan Repayments: Make repaying your student loans a key focus in your financial plan. By directing extra funds towards your loans each month, you can clear them quicker and save on interest charges in the long term.
7. Engage with Your Lender: If you’re finding it difficult to make payments, contact your lender to discuss alternatives such as deferment, forbearance, or different repayment plans. They may be able to provide temporary relief until your financial situation improves.
By putting these strategies into action and being proactive about managing your student loan debt, you can work towards managing and eventually clearing your student loans.
Top 3 Reliable Sources Used:
Federal Student Aid (FSA): FSA is a division of the U.S. Department of Education that offers information on federal student aid programs and repayment options for student loans.
Consumer Financial Protection Bureau (CFPB): The CFPB provides resources and tools to assist consumers in navigating student loan repayment options and understanding their rights as borrowers.
Student Loan Hero: Student Loan Hero is a trustworthy website that provides advice and tools for managing student loan debt, including tips on repayment strategies and refinancing options.
GOD BLESS YOU!
JC.