Repaying Student Loans- Where To Look For Help

This article will discuss a number of ways in which people can get help with repaying student loans. First, however, it is necessary for student loan borrowers to understand that student loan debt cannot be discharged in bankruptcy. Also, if you default on your student loans you can find yourself in a world of trouble. There are huge penalties for late payments, defaulting, and collection fees. The latter alone can be as much as 40% of the amount borrowed

plus accumulated interest. Many people who default on student loans are shocked to later find out that they owe three or four times the amount they originally borrowed even if they have made a fair number of payments. And if you default you lose most of the rights that go along with federal student loans, such as the right to deferment or forbearance. Despite these warnings it is estimated that as many as 20% of student borrowers who have borrowed at least $15,000 have defaulted by the 10 year mark of repaying their student loans. This adds up to millions of people in the U.S., and many of them find themselves overwhelmed by their student loan debt. On top of dealing with the harassment of collection agencies, they must also put up with having their wages garnished, and lenders can also garnish other payments due to a borrower, such as income tax refunds or disability payments. Borrowers need to understand their options and avoid loan default like the plague.

That said, there are a number of programs where the government will help with repaying student loans and even where the loan balance can be forgiven if the borrower works in certain fields. These programs do not apply to private student loans, just federally guaranteed loans. It is good advice to avoid private student loans in general

Military Service

If you join the military it is possible to have a large amount of student debt paid for by the government. Be sure to ask about the SLRP (Student Loan Repayment Program) when you enlist. If you join the Army or Navy you can have up to $65,000 paid off, and for the Air Force the amount is $10,000. This program even applies to the Reserves, and up to $20,000 of student loan debt can be paid off. Don’t just assume this will happen. Be sure that the SLRP is included in your enlistment agreement. Once again these programs for repaying student loans only apply to federal loans.

Teachers and Others

Certain teachers who work in low income schools can have their student loan debt forgiven after they have worked there for five consecutive years. Again, don’t just assume this will happen. Make sure you know if your school falls under this program. And there is also the Public Service Loan Forgiveness Program, and teachers can fall into this category as well. In fact people who work in many public service fields can have their student loan balance forgiven after ten years of service. A smart thing to do in this case is to make the smallest monthly payments possible until the loan is to be forgiven. This will be discussed in the next section.

Income Based Repayment Plan (IRB Plan)

You can arrange to have the lowest possible monthly payments for repaying student loans if you apply for the IRB Plan. This sets up payments based on your actual income. Borrowers have the right to switch repayment plans every year. Switching to this method of repaying student loans is also useful if you run into financial difficulties and cannot meet your monthly loan payments.

There are other public service professions in which people can work and have help with repaying student loans or even loan forgiveness. These include health care professions, being employed by the federal government, and certain attorneys who work as public defenders. Again, don’t assume debt forgiveness will happen. Make sure the job you take is included in these programs and have it specified in your employment contract if possible.