With the gigantic increase in education expenses, student debt has turned out to be the sole means of paying for college for many students.
While a student loan might help a student to pursue a career of his choice to fulfill his dreams, the other side of the coin is that some students take a loan but don’t actually complete their studies, and some students take on more debt than their career choice might allow them to pay back comfortably. Moreover many a time, students fail to understand fully the complete consequences of such a decision as taking a student loan quite early in their careers. Most importantly, a student loan cannot be discharged in bankruptcy except in cases of undue hardship.
Keeping all these pros and cons of student debt in mind, here we enlist 7 effective but little known ways to get out of student debt.
1: Know how much you owe:
It might be that you don’t have a clear idea of the number of loans you have or even how much you owe because perhaps you might have taken multiple student loans. So, first of all, calculate the total cost of your loans. A number of calculators, available online, can help you ease your task. You just need to enter a few pieces of information to get a complete breakdown of your payments and how long it will take you to pay off your student loans.
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Getting your loans restructured:
Students can go for some agencies where the interest rate is restructured in such a way that can fit your pocket. These institutions can actually offer students alternate repayment options like extending repayment and providing a repayment scheme which is income-based. These may reduce the monthly payment by stretching out the term of the loan. While such an option brings down your monthly instalment, you may have to churn out some extra money as interest on the main principal.
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Refinance Your Student Loans
Students can consider getting a private loan at a lower rate to refinance their existing student loans they if they have already graduated, secured a job and have become quite stable.
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Automate Student Loan Payments
Checking online options of repaying your student loan might be another solution to your headache as you stand a chance of getting a reduction in interest rate if your loan is repaid online. So, talk to your banker for an auto-debit, where your monthly loan amount will be automatically transferred from your checking account.
It might be that you don’t have a clear idea of the number of loans you have or even how much you owe because perhaps you might have taken multiple student loans. So, first of all, calculate the total cost of your loans. A number of calculators, available online, can help you ease your task. You just need to enter a few pieces of information to get a complete breakdown of your payments and how long it will take you to pay off your student loans.
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Getting enrolled for Peace Corps
You can get a portion of your student loan forgiven if get enrolled to volunteer for Peace Corps. Should you choose to volunteer as a public school teacher, social worker, a policeman or a firefighter, you can also get a part of your loan condoned.
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Creating a repayment schedule by making additional payments
Apart from going for an auto debit option to pay your lender and getting a reduction in the loan interest, you can alternatively make additional payments in small amounts whenever you get hold of some cash. You can just log on to your lender’s website and make the additional payment thereby lowering your principal amount.
7. Going for an Income Based Repayment Scheme
You would do good to opt for an income based loan repayment scheme which not only matches your loan payments with your income and family size, but also typically reduces the size of your loan to 15% of your income and makes you eligible for forgiveness. The balance of the loan remaining after payment for a period of 20-25 years is generally forgiven.