Taking Control Of Your Student Loans


Taking Control Of Your Student Loans

Student loans are common among Americans, in fact, 42% of Americans who attended college have incurred student loan debt. There is a plethora of reasons as to why people have to take out loans to go to college, but just like the certainty of death and taxes, you'll have to pay your student loans back.

Having debt of any kind can impact your financial life, and can put big life steps you planned for yourself on hold. Proper research and student loan planning can help lessen their future impact. Here's how to take control of your student loans and put yourself on the right financial track.

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Research before you take out student loans

There are over 5,000 colleges in the United States, giving high school seniors an overwhelming choice to make. While decisions about location or campus size are important, the main determining factor for many students is price. When you research all of the places you would like to go to college, make sure to include places that you know you can actually afford. Do a side-by-side comparison of your short list and try think about out how much student loan debt you can take on with the type of profession you will have once you graduate.

When you've narrowed down your school choices, search for scholarships available to you. There are different types of scholarships for many academic and extracurricular activities, you might qualify for more than you expect. Check with your high school guidance counselor for a list of options and deadlines.  Even if the scholarship is for a small amount, any scholarship money you receive will reduce the amount of student loans you will need, and subsequently have to pay back.

Read More: Be The Master Of Your Student Loans

You might have a dream school that you've always wanted to attend, but in order for this to happen, you would have to take out a lot of student loans. Try not to set yourself up for financial difficulty post-graduation just because you attended an expensive college. Think about how you want your life to look after you finish school. Having a large student debt load may mean having a high monthly student loan payment, needing to live at home with your parents or limiting your vacations and other large purchases after college. Try to consider all of these factors when picking your school and your student loan debt load.

From college grad to the student loan repayment plan

You won't fully feel the effects of your student loans until about six months after graduation when you receive your first bill in the mail. If you have federal loans, you'll be setup with a payment plan, but that plan can be altered if you feel you won't be able to make that minimum payment. If you want a more in depth breakdown of the different types of federal loan repayment plans, you can check that out here. If you have private loans, you're going to want to reach out to your lender to determine a payment plan, if you would like a different one than what is provided.

You'll have the option to consolidate or refinance your student loans. Consolidating your loans means you'll combine all of your student loans together into one new loan rather than having a few smaller loans. This new loan is a weighted average of your old loans' rates. Although you will have a lower monthly payment, you will also be lengthening your terms and have to pay more interest as a result.

Read More: Top 10 FAQs For Your Student Loans

Refinancing your student loans is when a new loan is used to pay off your existing loans. Usually you would look to refinance your loans if you have private loans. If you have been working after graduation for a few years and your credit has improved, you may qualify for a lower interest rate on your loans, that's a good time to think about refinancing your loans.

College: Round two

It's not uncommon for people to continue on to post graduate education after they've finished their undergraduate degree. There are a lot of diverse career fields that require you to need an advanced degree either to enter, or to advance further in your chosen field. There are multitudes of people who want to continue their education, but they fear that adding more student loan debt will lead to a crippling financial future. Let's examine the pros and cons of taking out postgraduate student loans on top of your under graduate loans.

Plan the trajectory of your career with loan repayment in mind. Bear in mind that many people go into their undergraduate studies thinking they want to do one thing, but end up studying something different. Use your undergraduate studies as a guide to help lead you into the decision to continue your education or not. If you are an undergrad studying in a field that you know will require a post graduate degree, look at careers in that field to see what your projected income might be. Then, map out the student loans you would have to take out to continue with school. If you think the student loans would be worth your projected income, then taking out more loans might be the right decision for you.

Continuing your education isn't something you should do just because it seems like everyone else is doing it. Not every career path requires more schooling. Taking a gap year (or two) after your undergraduate schooling will give you time to think, save money, and potentially gain experience in your field.

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Student Loan Forgiveness Program

The Student Loan Forgiveness Program was created under the College Cost Reduction and Access Act of 2007. The earliest time in which borrowers could receive forgiveness under the program was after October 1, 2017; therefore this is a relatively new program. This was created to provide people with a way out of their federal student loan debt by working full-time in public service. The program allows Direct Loan borrowers who make 120 qualifying payments under a qualifying repayment plan, while working for full-time for a qualifying employer, to have the remainder of their balance forgiven.

In order to qualify you must work for a non-profit organization for ten years. It doesn't matter what position you work for at the non-profit as long as you are employed with a non-profit organization and working the amount of hours that are required. This could also include working two part-time jobs at different non-profit organizations and still meet the amount of hours required. Your time at the non-profit can also be intermittent. So if you decide to leave your job for a period of time to explore other options and return to the non-profit sector at a different time, you can still qualify for the program.

Only direct loans are eligible for the Student Loan Forgiveness Program. This means Subsidized and Unsubsidized Stafford loans, PLUS Loans, and Federal Direct Consolidation Loans qualify for the program. If you have both federal and private loans, private loans do not qualify for this program and you would have to continue to pay those off separately.

Lastly, you need to have the right type of repayment option. All of the income-drive repayment options would qualify you for this forgiveness program. These plans include the Income Contingent Repayment, Income Based Repayment, Pay as You Earn, and Revised Pay as You Earn. After you have 120 payments of this type, you can apply for the program. Just because you're making the payments towards one of these plans doesn't mean you're in the program. It's crucial that you take steps to actually apply for the program.

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Student loan options can be complex. It's important to do your research as early as possible. Parents should encourage high schoolers to apply for scholarships and help them decide which loans will be best for them in the long run. Try not to let your current student loans deter you from continuing your education if you feel passionate about it. Take a deep breath and go over all the financial aspects. School is expensive, but is worth it. You're not alone in the student loan struggle!

Katie Fatta bio with side border

Katherine Fatta is the Social Media and Content Specialist at Navicore Solutions. She creates fun and informative social media posts that engage the public. She’s also the host of Navicore’s podcast, ‘Millennial Debt Domination.’ You can listen to our podcast here.

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