Student Loan Debt: Relief Options and Strategies for Repayment

 Student loan debt relief options and repayment strategies

In our society today, student loan debt is at a rise, as the financial status of many is degrading. There is a high inflation globally even when no one talks about it as a critical issue. This constant rising inflation and cost of living had forced many from continuing their studies while others have to find other means to still afford the expense of studying. The students loan debt as the name implies is usually more common amongst scholars seeking higher education either within or outside the borders of their countries. 

As the cost of acquiring education continues to appreciate, and interests placed on these student loans continue to appreciate too, it is essential for one to know the relief options and simple repayment strategies in order to manage their outstanding student loan debt amicably.

Why this matters is that lack of student loan management strategy have forced many into depression  while some even take their lives or resort to drug abuse. The hope for paying of a loan debt is that the student will pay back after graduation. Unfortunately, after fighting to break away from the walls of the university, life doesn't always have to favor everyone who finishes school. Many have graduated for years without finding jobs that can help them settle their loans.

Here, we will show you all there is to know about various student loan debt relief options, repayment strategies and lots more. 

Types of Student Loans

There are two main categories of the students loan they are the federal and private student loans. 

a. Federal student loans

Basically refers to the loans given by the government and is usually borrower friendly, as they offer income propelled repayment schemes and forgiveness programs. To receive such loans, the students family member member is required to fill certain forms like the Free Application for Federal Student Aid (FAFSA). The form is available on the FAFSA online portal and easy to complete.

Federal Students Loans exist in 4 categories including:

i. Direct subsidized loan - This is available to undergraduate students with special financial needs. The criteria is stated on the FAFSA platform. It comes with limit and so much advantages.

ii. Direct unsubsidized loan - It is available to all students including graduate, undergraduates and higher degree holders. This loan allows students to borrow enough that can cover their study expenses.

iii. Direct PLUS loan - This can be a grad PLUS or parent PLUS loan as it allows both students or parents to borrow. Students credit score is considered before this loan can be give out. Also, it is the school that determines how much the federal government can release for the student loan.

iv. Directly consolidation loan - This allows beneficiaries to borrow from different federal loan options. You can involve in this if you are in your repayment or grace period of the previous loan.

The top federal student loan programs in the United States is William D. Fort Federal Direct Student Loan Program (WDLP). In countries like India, federal student loan such as the Fed Scholars Loan, are only available to selected programs and institutions. Some developing countries do not even have such scheme in place for students educational supports. Find out about your country's loan program.

b. Private student loans

Refers to student loans that are offered by private individuals such as enterprises, commercial banks, foundations, unions, agencies , cooperation and other financial institutions. These loans usually have higher interest rates than that of the federal student loans.

Some of the best private student loan donors are:

i. Student Ave: They provide student loan from $1000 with interest rate ranging from 4% to 17% based on the loan agreement or chosen program. You can begin paying your loan back while in school or after your studies. The only issue is that your loan interest will accommodate even while you are in school. Student Ave's loan program is one of the easiest to get.

ii. SoFi: They only give loan to students with good academic performance or high credit score. Before applying for SoFi loan, you will have to submit a proof of your performance. They are best for repayment rate of about 5% with very high flexibility.

iii. Ascent: Are you a poor performing student and feeling that student loan institutions will not offer you a chance? Ascent is here to help. This private student loan institution offers you loan irrespective of your school scores. All you need is to visit their website and apply for a non-cosigned outcome-based loan. They will surely offer you, especially if your study program is not more than two years.

iv. Other private student loan donors include Earnest, RISLA, MEFA, Citizens Bank, Laurel Road, among others.

There are other good private loan options out there. Go online and search for the student loan options or contact us to guide you through the process.

Relief Options for Student Loan Debt

There are just a few relief options, and they are shortlisted below:

  • Income-Driven Repayment Plans

The Income-driven repayment plan is a relief option for student loan debt where the borrower repay the debt based on his or her income monthly, making it a lot more easier for the borrower, lessening risk of financial loss. 

This particular relief option also reduces the borrowers monthly repayment with time and furthermore qualifies the borrower for a loan forgiveness. Note that this relief option is usually common amongst borrowers that signed up for the federal student loan.

Student loan debt relief options

  • Loan Forgiveness Programs

There are numerous loan forgiveness programs, such as the Public Service Loan Forgiveness (PSLF) and the Teacher Loan Forgiveness (TLF), these loans forgiveness program offer borrowers access to a part of their student loans forgiven, in exchange for their services in the requested fields.

Organizations offering this loan can allow you to work with them for certain period or offer services that covers the loan student loan them offered to you.

  • Loan Consolidation

This relief option has to do with the combining of multiple federal student loans into a single loan with a fixed interest rate. Consolidation of loan makes it easier to repay, as the term of payment is extended, borrowers can now pay in bits at reduced interest rates.

Repayment Strategies for Student Loan Debt

1. Create a Loan-targeted Budget

It is important and ideal for borrowers intending to repay their outstanding debt to develop a budget, that consists of their income per month, their expenses, amount for repayment and so on. This habit will help you keep record, reduce unnecessary spending as a student and be accountable for your money spent. Proper budgeting see to making sure that you allocate just enough amount of money to repaying your debt, whilst still making the essential expenses. 

2. Explore Refinancing Options

Refinancing refers to substituting an ongoing student loan with a new loan that offers more favorable terms and conditions than the already existing one, such as a relatively lower interest rate or extended repayment term. With this relief option borrowers can always clear off the debts easier and quicker, note that these relief options may vary based on the lender, or the type of loan signed up for.

3. Make Extra Payments

If you really do want to clear up your debt faster it is ideal to make other additional payments, irrespective of the amount as it accumulates and will drastically reduce the outstanding loan amount with time. This will also help you to be more cautious of spending, make more precise decisions, save more, and be accountable for your expenses.

4. Seek Employer Assistance

Try to get a job , as some employers offer student loan repayment as a part of their work benefits for employees. As a borrowers make researches to find employers around you that make this offer, and partner with them.

Student loan debt repayment strategies

5. Get a workplace loan

It can feel easier to owe your current workplace over a long-term debt from unrelated institution. Besides, most workplace loans will not require interest. Therefore, getting a loan from your current place of work after graduation to clear off your student loan, once and for all, will save you from accumulated interest due to delayed repayment.

6. Double-up your earning

When you increase your source of income and boost your earning, the chance of paying off your loan on time is large. Find remote job opportunities and other work from home jobs or income-generating hobbies and skills that can help you make more money and clear your loan on time. There are many remote online jobs that you can do while studying. These jobs offer more flexibility over traditional working systems.

7. Try saving as little for the repayment process

You income may not be enough to pay the agreed amount on a set period but the little savings can make a difference. Even while in school, try to save some money for your student loan clearance. Once the money is significant, do not hesitate to keep clearing your debt little-by-little.

Frequently Asked Questions about Student Loan Debt

Can I Consolidate Private Student Loans?

The answer is “No” because, the Private student loans are not eligible for the federal loan consolidation programs. As the name implies it is only for the federal student loans. Nevertheless, borrowers can get access to private students loan consolidation options that are mostly offered by private financial institutions.

How to easily pay your student loan debt

What is the Difference Between Forbearance and Deferment?

To start with, deferment is usually granted for specific reasons, such as unemployment or enrollment into school, forbearance is given at the lenders will, in tight conditions. Note that the both allow the borrowers to pause the repayment of loans for a while then continue the repayment  after a period of time. 

Should I Consider Public Service Loan Forgiveness?

The Public Service Loan Forgiveness (PSLF) is a very recommended relief option for borrowers that work in public service professions, such as government agencies, government financial institutions, non-profit organizations and so on. This relief option, provides opportunity for outstanding debts to be forgiven, and then services will be used to repay in specific fields and profession.

Final Words

Challenges might arise from obtaining a student loan, but with proper knowledge and good strategies one will be able to overcome them.

With the understanding of the types of student loans, various relief options for borrowers and developing effective repayment strategies, borrowers can now seize this opportunity to clear off their outstanding student loans at ease and work toward financial balance. 

Having this basic knowledge of the proper management of student loans will help you make more precise and informed decisions that will enable your financial goals. Now borrowers can scale through the complexities of student loans and venture into a journey of financial greatness.

Note: Getting a loan should be the last option. If it is not compulsory, do not get a student loan, instead seek scholarship options.

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