Ways to Get Rid of Student Loans
There s a lot of talk on college education these days and not enough emphasis is placed on how to get rid of student loans. Many students feel that the only way they can get through college is by taking out large loans. If that is true, then how come so many of them are struggling financially? The answer is fairly simple – student loans have a very high interest rate. People who graduate with large loans often find themselves struggling to make ends meet.
If you are one of the many people in the country that has a lot of college debt, then you know exactly how difficult it can be to pay off your student loans. There is absolutely no easy way to eliminate student loans without repayment, but luckily there are forgiveness options if you qualify. For federal loans, there are several forgiveness programs available if you qualify and make proper payments. However, any program that promises to eliminate your entire debt without making any payments is most likely a scam.
The best student loan relief option is probably bankruptcy. If you are able to file for bankruptcy while you still owe a lot of loans, then you could save yourself a lot of time and hassle. Most people are not eligible to file for bankruptcy if their debts are less than the total value of their current home. This is due to Congress instructing all the banks to severely penalize people who file for bankruptcy before they are able to repay their loans. Because of this, you will most likely have to take out another loan at a much higher interest rate than you would if you used the bankruptcy option.
Another option for eliminating some of your loan debt is to simply stop making payments. If you are in a better financial situation, then this may be your best option. However, because bankruptcy can affect a credit report for 10 years, it is important that you consider the consequences before you take this step. Once you are done with paying off your loans, you will then need to reapply for loans.
The second option that you have for student loan forgiveness borrowers qualify forgiveness programs based on the number of student loans that you have. If you have a large number of loans and cannot keep up with the payments, then you will not qualify for any of the programs. The best thing to do if this happens to you is to contact your school about deferring your payments until you have enough saved up to start paying them. This can save you a great deal of time and money in the long run. It is also worth mentioning that even if you do qualify for forgiveness, it is unlikely that you will automatically receive any of your student loans forgiven as long as you have not defaulted on the loan in the recent past.
The third option that you have for getting out of trouble with student loan forgiveness involves applying for a government teacher loan forgiveness program. These programs differ slightly from most other forgiveness programs because they do not involve any kind of income verification. In fact, any student loan borrowers that do qualify for PSLF or the federal subsidized Stafford loan repayment program can apply for teacher loan forgiveness. You will not need documentation of hardship, just a couple of months of proof that you are currently employed and able to pay your loans.
The fourth option that you have for getting out of trouble with forgiveness is to ask for a repayment plan that consists of interest only. Although you may have a significant amount of interest paid on your unsecured loans at present, you will still have enough left over to complete your regular monthly payment obligations. The interest only repayment plan is set up in such a way that the interest you will not have to pay off until you have saved enough money to repay the balance completely. As long as you meet the guidelines for eligibility, this type of repayment plan is ideal because it allows you to have a little bit of leftover disposable income in your pocket after your education has ended.
The fifth option available to loan borrowers who are looking for ways to get rid of student loans is to file for bankruptcy. If you do decide to file for bankruptcy, you must be very careful that you do not make a mistake in such a decision. Although a bankruptcy filing will end your loans in a short period of time, you will have to deal with a very public stigma for at least 25 years. This stigma will make it difficult for you to obtain a new job in the future. It will also make it more difficult to apply for federal student aid programs in the future, since bankruptcy is listed as a negative on all financial documents required for eligibility.