Beating Student Loans

Oct 23, 2012 by Juniette Fiore

Student loan debt is becoming a greater burden on society. Education is becoming so expensive that soon people will not be able to use it to their advantage because they will be too busy paying off loans. Already there are many who can’t even afford to go to school and will most likely find themselves trapped in low-paying jobs. Sure, there are scholarships and other forms of financial aid, but sometimes these just aren’t enough to cover the rising cost of tuition. If students cannot afford to get a degree, employers will find themselves having to look for well-educated foreigners instead.

The Obama administration has already begun to address these issues, but the reality is that some people will simply never earn earn enough to pay off their student loans. When we are signing up for loans no one tells us about deferment, forbearance, or income-driven repayment plans available after graduation. The best thing we who are in debt can do for now is educate ourselves on the options available.

Enrolling in the Income-Based Repayment Program (IBR) means that your payments would be based on income and family size. For most borrowers, payments would be less than 10% of their income. The smaller payments mean that it will most likely take you more than the usual 10 years to pay off your loans. On the bright side, you won’t be under stress trying to find a high-paying job within 6 months after graduation. Of course, as your income grows so do your payments, but at least you can afford them.

Another option we are not told about is Public Service Loan Forgiveness. Congress created this program to encourage students to work full-time public service jobs with the plus being that after a certain number of payments the remaining balance would be forgiven. Unfortunately, your student loans are only forgiven if you give 10 years of your life to this program.

Of course, not everyone wants to spend 10 years in public service. You can always join a volunteer program instead. Becoming part of the Peace Corps, for example, means you can have a certain amount of your Perkins loan cancelled. Other programs even let participants defer their loans during service. How great is that?

There are so many ways to beat your student loans, all it takes is some research.

Find out more about student loans at studentloans.gov