Student loan repayment is never easy. It can be especially stressful when you’re just graduating from college and have a mountain of education debt on your shoulders. For many, student loans represent the key to post secondary education for their entire lives. But what happens if you can’t make the monthly payments?
The first step is to consider whether or not your chosen repayment plan is right for you. There are several factors to consider before making your final decision on repayment. Consider the average cost of living for your city, state, or province. Calculate your gross income per month and your disposable income. Use these two figures to calculate your disposable income threshold, which is the amount that you would need to live on comfortably to repay your student debts.
Your other option for repaying your student loan obligations is to seek out the assistance of a compulsory superannuation or income supplementation scheme. These plans allow you to defer your payments until after you’re no longer receiving assistance from the government. This is good news if you are finding it difficult to make your required payments because you have a low-income. Many people find that this option is extremely helpful in helping them pay off their student debts. For more information on either type of plan, contact your financial aid office.
If you’re unable to get assistance from a scheme to help repay your obligations, you may want to consider a work study program. Work study programs are designed specifically to help low-income earners to afford the cost of post secondary education. In most provinces, graduates can apply for up to 15% of their course costs through this type of repayment plan.
You may also want to consider the possibility of a loan repayment holiday. A repayment holiday allows you to temporarily stop repaying your education loans while you continue working. This is a great option for someone who’s juggling several sources of income. The interest and taxes associated with the loan amount will be stopped while you are not in school. However, you will only be able to take advantage of this holiday once per calendar year. Repayment holidays are usually scheduled for the summer months, but there are exceptions that vary across the country.
Income Thresholds are another option available to help loan repayment or debt repayment for individuals who are struggling with both types of debt. With an income threshold, you are required to calculate your net income (after tax and basic personal expenses), then apply that amount to your monthly debt obligation. This amount is the amount that you must qualify for in order to receive the benefit. The benefit is equal to the total of your net income minus the applicable income threshold amount. Again, this requires calculations, which could potentially be time-consuming for some.
Both of these options are voluntary and are not required by the lender. There are other financial services, such as mandatory repayments and consolidation services that may be available to you if you meet certain income thresholds. For most borrowers, the most important thing is to get control of your situation so that you can make informed decisions about your borrowing and debt repayment. If you are struggling with multiple debts or lenders, then you should contact a specialised counselor who can help you map out a plan for your financial future. He or she can give you the tools that you need to overcome your situation and get your money running smoothly again.
You don’t have to struggle with high interest rates on credit card and store card purchases. If you are able to repay all of your current debts, but find that your income doesn’t meet the threshold level for income thresholds, you may qualify for low-income assistance. Most programs require that borrowers be current with at least the minimum payments required. To learn more about repayment and consolidation plans, contact a financial consultant today.