There’s no denying a student loan crisis in the United States. With the continued cost of higher education, most individuals who enroll in a college or university end up taking out loans. These loans often come with a significantly higher interest rate than traditional loans, which can quickly put you financially behind. So what should you do if you’re struggling with student loan payments? Here are a few tips to consider:
Consider An Income-Driven Plan
This plan only available for federal loans, so if you have private loans, this is not an option. However, if you do have federal loans, you may be able to apply for an income-based plan. This means that your monthly payment will be adjusted so that it isn’t higher than 10-20% of your monthly discretionary income.
Have Multiple Loans? Consider Consolidating
If you’re like most students (or former students), you probably have multiple loans. It can be difficult to keep track of all these loans, and even if all the loans come from the same lender, you never really know where your money is going, and which loan the money is applied to. When you consolidate your loans, you’ll have everything put into one monthly payment. Additionally, a consolidation loan will likely come with a lower interest rate, which can help cut your monthly payment down drastically.
Deferment or Forbearance
Ideally, you don’t want to use a deferment option, but it is available if you need it. Deferment means you will postpone paying your loan. However, interest will continue to pile up, so when you start paying again, you’ll likely have a higher monthly payment (although if necessary, it will buy you some time to figure out finances). Forbearance can give you a reduced payment for up to a year. During the year, your interest rates will be cut down, which helps you get a foot up on paying the loan back.
Talk With Your Provider
Your provider doesn’t want you to default on your loans (even if it seems like it sometimes). It is better for the lender to have you pay the loans back, even if at a reduced interest rate, than to have you stop paying altogether. So whatever you’re struggling with, give your lender a call. Chances are that there’s something that can be done about your loans, to make the payments more affordable. That one phone call may end up saving you considerable headache (and money).
As the Business Banker for Henry County, Dodie Cason is passionate about serving local businesses. Working directly with business owners and professionals; she is diligent in her desires to find solutions that save time and money, build financial stability and simplify banking processes. You can count on Dodie to serve you with a friendly smile, a compassion for your needs and a commitment to excellence.
AVP, Business Banker • 770-515-7209 • [email protected]