According to CNBC.com, the average student leaves college with around $37,172 in student loan debt. That’s over $20,000 increase on what it was 13 years ago. Here are 10 must know items about that debt that Uncle Sam forgets to tell you.
#1. Be Organized in Who you Borrowed From
Knowing who your loan is with, the payment terms, and amounts owed is VITAL. Also, knowing if this is a private loan vs a Federal loan means huge differences in your rights and what you can do once out of school. Also, if you get into financial trouble down the road, what you could be liable for or even wipe off if needed due to hardships. Which brings us to numbers 2 and 3.
#2. You Can Ask the Government for Help if You Need it.
The federal government will grant you different payment options as needed. You heard me right. If some or all of your debt is federally guaranteed, you can enter into an income-based payment plan. You can have your student loan repayment capped at a set percentage for even as long as 20 to 25 years to help you out over the long term. Just remember the longer you take to pay them back, the more interest you will be paying to the government as well. And if you default they will keep your income tax returns till your loans are paid off in full. You can find more details here studentaid.ed.gov,
#3. You Can get Help from Private Banks if you Need it.
There are ways to get relief from your privately held student loans as well. If you’ve got loans through Citizens Bank, Discover, or Wells Fargo, chances are they can offer you a loan modification or may even lower your interest rates. They have also been known to put temporary freezes on payments while you get going in the real world and back on your feet. Many times these programs can be used more than once as needed but will have to show some sort of documented proof of hardships. Just don’t abuse them.
#4. There are People Wanting To Scam Not Help You.
Remember if it’s too good to be true…it is. Don’t fall for all of the things you will read online about the payback programs available to you. Too many students and former students get swindled every day with these scams. The best things to do is if you want to know about these, is research them with the local university financial aid office. Or better yet, check with the U.S. Dept of Education. They want their money just as bad as you don’t want to lose it to someone crooked and out to rip someone off. If someone is offering a student loan forgiveness program or reduction program but wants any type of funds upfront, report them IMMEDIATELY.
#5. Aut0-Debit Saves you Time and Money…Seriously.
If you can put your payments on auto-pay monthly, you will save money in the long run. Not only will you not forget to make payments monthly. But many debtors and banks will give a nice discount if you agree to sign up for auto-pay for the duration of the loan payoff. The only reason not to do this? If you’re on a tight budget and may overdraft your account. Then you’ll be hit with fees from your bank and possibly go into automatic default of the loan due to defaulting on the payment plan with the government or bank.
#6. You can Renegotiate your interest rates and loan terms.
If your credit is solid and in good standing, you could refinance your entire balance due. That’s right, you could possibly work with the lenders and refinance the debt due and get a much better interest rate than you got when you took out the loan while you were in school. It’s an added bonus if you already are employed along with the good credit. It shows you have the ability to get going right away on these payments and the lenders are more likely to work with you.
#7. Fixed Interest Rates over Variable Interest Rates
If the fed raises interest rates…more than likely it doesn’t affect your student loans. Most student loans from the government are a fixed interest rate. The ones you have to worry about are the variable-interest rate private bank loans you may have taken out in addition. You may be able to work with the lenders and get them to either reduce the rates or switch it to a fixed interest rate loan altogether. Which would be ideal in the long run due to the way rates can fluctuate over time.
#8. Know Student Loans may be in Award Letters.
If you’re about to enter college or are still in college, know how to read your financial aid “award” letter. It’s critical you know exactly what you’re receiving in the form of grants, loans, and scholarships. Many schools will mix these all together in the letter so it appears you’re getting more than you are. But much of it will be in the form of loans that you will be responsible for. Make sure you take time to really look over exactly what you’re receiving before it’s too late and you take out loans on top of loans you’re getting from the schools “package”. Then you’re really stuck.
#9. Scholarships aren’t just for Jocks or Freshman.
If you’re still in school, it’s not to late to get a scholarship. No matter what you heard or what someone told you. Scholarships are not just for freshman. In fact, there are certain scholarships designated specifically for upperclassmen like you. Whether you’re involved in extracurricular activities, music, athletics, or academics, there are scholarships you would qualify for. Check with your college/university financial aid office to learn more about what you have available. This is free money. So why not try all you can as you already have enough to pay back. Resources are available at Cappex.com, Fastweb.com, and Scholarships.com for all years and degrees.
#10. WE ALL HAVE THEM AT ONE POINT, SO BREATHE…
IT’S OK YOU’RE IN DEBT. Most Americans are in some sort of debt. As I said before, the average Amercian leaving school has over $37k in loans. This is ok. You will survive just as generations before you have. Things may get stressful at times but know people are there to help. And many of the above systems are in place to help you pay back the debt but get on your feet as well. After all, you went to school to have a better future not be in debt for the next 30 years. So relax, there are lots of great jobs out there just waiting for someone as talented as you to grab it.