Tag: national student debt

A Syllabus For The Cost for College Students in America

Posted on | by Brandy Woodfolk

Yale University, New Haven

Student loan debt has been a major point of discussion for some time now. It really is not surprising, though. The national student debt adds up to more than $1.64 trillion. Yikes! That is a lot of debt, and it comes from 44.7 million Americans.

So, keep reading to find out how you can save money on your college journey and what is important to know before you decide to take a student loan or before any kind of borrowing money for college.

Make Your Perfect College Plan Considering These Common Costs for Students

If you or a loved one are preparing for college, numbers about national student debt probably scare you a bit. That’s understandable- debt is a scary thing. I get a little queasy every time I think about my own student debt. There are so many things that I wish I would have known before getting into that debt. I had no clue what I was getting into at the time, or how I could have changed it.

That is no longer the case, though. I have learned from my mistakes when it comes to debt and college costs, and I want to share those lessons with you. We are going to make our way through the most common costs for college students and talk about how to minimize them.

Tuition

It does not matter what school you go to, what degree program you enter, or where you live while you are in school- tuition will always be the biggest cost for college students. Tuition covers the cost of actually taking the courses. It is usually charged per credit hour and can vary wildly.

The cost for college students to receive a four-year degree can be anywhere from $20,000 to hundreds of thousands. As of 2019, the average in-state public college degree averaged about $26,500 while a private college education averaged about $53,000, which is actually considered to be a “moderate” cost for college students at private schools. That, my friends, is not moderate by any stretch of my imagination.

The short and simple truth to it is the tuition cost for college students depends largely on the school they attend and the degree program they enter. I do not want to push anyone away from attending a school they really want to go to, but when you are trying to cut the tuition cost for college students, you should consider the following:

Is there a reason that you want to attend this school specifically? If a high priced college has offered you a scholarship or something else, by all means, go for it. If you have been promised a well-paying job if you graduate from that college, go ahead. However, if there is no set reason you want to go there, ask yourself if you could consider a lower-cost option.

Higher College Cost doesn’t Mean You Will Get a Better Paying Job

Could you achieve the same career by earning a certification in that field as opposed to a full four-year degree? Even after earning a Master’s Degree, I still find myself getting more use out of a certification course that took me three months to complete.

Does that school have better results than others? I am not talking about test scores or anything like that. I am referring to the results after the students graduate. Does a high percentage of graduates get really good jobs after graduation? Is that percentage higher than in other schools?

Unless you are getting grants and scholarships to cover the entire cost, you will be in debt when you leave college. Well, also unless your family has money and can afford the cost out of pocket. Otherwise, you are probably going to owe some student debt. The amount of debt depends on a lot of factors, but the point is this: If you attend a really expensive college, are you going to be able to get a good enough job to cover those high student loan payments and still live comfortably? Think about it. While everyone believes that doctors have tons of money, it actually takes them a while to work off their medical school debt. That does not mean that you should not go to medical school, but it is something to consider carefully.

The point that I am trying to make here is that the higher cost colleges do not necessarily equal the highest paying jobs or the biggest bank accounts. If you- or your loved one- want to attend a school with a high tuition cost for college students, just examine the reasoning behind it and make sure it is sound. Otherwise, you may end up in unnecessary debt.

School Fees

In addition to tuition, most colleges charge school fees. These can literally be for anything, depending on the college. Some fees are charged to cover the use of the library, gyms, or other areas that need to be maintained. There may be technology fees to cover the use of computer labs, health fees for visits to the college’s health center, or anything else the college offers.

Fees are a way of spreading the cost of upkeep and maintenance among everyone. They are not really a bad thing as they go to benefit all students, but they are something to keep in mind when considering the overall cost for college students.

Statistic: Average annual cost to attend university in the United States, by institution type 2013-2020 (in U.S. dollars) | Statista

Room and Board

Room and board are another area that can vary wildly. The average room and board cost for college students attending private schools averaged almost $13,000 last year. Public schools were not far behind, coming in at about $11,500.

Some students opt to live off campus. This does not necessarily guarantee a lower cost, but it does give you a little more control. It allows you to find a place within a budget you can work with. You might also choose to live with some roommates to lower your cost. If you live off campus, though, you must also consider that you will be providing more of your own food, so that is a cost you will need to calculate yourself.

Some other students decide to go to college near home and continue to live with their parents for a time. This is definitely a way to save money overall, but it is not an option for all students. If you have this choice, talk it out with your parents and decide together if staying at home for a while is the best move for everyone.

Books and Supplies

Sometimes, the quoted tuition price includes an estimate of the cost for college students to purchase their textbooks. This estimate is just that- an estimate. The textbooks may costs more or less than that as the ones you need will depend on your classes. The average cost of books and supplies for the 2019-2020 school year was more than $1,200.

Even if that estimate is accurate, it does not include the various other supplies you will need. You still have to consider the cost for items such as:

  • Notebook paper
  • Pens and pencils
  • Highlighters
  • Notebooks and binders
  • Study guides
  • Calculators

And pretty much all of the other items you need for studying and completing your classwork.

Equipment

Let’s not forget the other items you will need to help in your day to day life. You will likely need things like:

  • A laptop/tablet and printer, flash drives, and similar items
  • Microwave/hotplate for your dorm or home
  • Cooking items, like pots, pans, and utensils
  • Sheets, towels, and blankets
  • A vacuum
  • Lamps
  • Any specialty items for classes (like a camera if you are a photography student)

If you are living in your own home off campus, you will need even more, like a bed, furniture, and appliances. You might be able to find a place that is furnished, but if not, do not forget items for your home.

Transportation

The transportation cost for college students varies according to how much they will be traveling. For those living off campus, the cost will include fuel for your car, insurance, and more. If you are attending college away from your family, you will need to calculate the costs of traveling home on your breaks.

Personal Expenses

The tuition cost for college students does not include any personal expenses. Groceries, toiletries, medications, streaming services- like Netflix- clothes and laundry, entertainment, and anything else you choose to purchase is in addition to tuition and fees.

Tips for Cutting Costs and Limiting Your Debt

Here are a few other “tricks” to help you cut your costs:

Shop Student Loans

I hope from the bottom of my heart that you can get enough aid to cover your full costs and not have to take out any student loans. I know what it is like to be in that debt and I would not wish it on anyone.Questions Before you get a student loan

Regardless of my hopes, though, you may find yourself in need of them, so I want to give you some very important advice here: Do not just accept the first loan you are offered. You should actually do some student loan shopping.

Not all student loans are created equal. The interest rates vary. Some charge interest while you are in school and others wait until you graduate to start calculating interest. Student loans can be as different as any other financial product. Do your due diligence and compare different student loans. Remember, this is a debt you will be dealing with for a while. The better loan terms you can get, the better off you will be.

And here is another thing: You do not have to stick with loans categorized as “student loans”. Student loans are widely accepted as a way to pay for college, but it is not the only way. You might find that you can get a personal loan to cover some of your school costs and that personal loans might have a much lower interest rate and better repayment terms than any student loan you can find.

The point I hope I am getting across is that you do not have to be stuck inside a box just because “that’s the way it is”. Be open-minded when it comes to covering your college tuition.

Getting a student loan from a credible lender is extremely important. You don’t want to get scammed. Loanry is here to help you make sure you’re on the right path.

Purchase Items Elsewhere

There is a pretty good chance that shopping on or near your campus for supplies and personal items is going to cost you more than in other areas. Have you ever noticed on vacation that sunscreen, deodorant, or other necessities cost about twice as much as they do at your local store? This is not an accident.

Retailers in vacation spots know that tourists will probably need those items, and take advantage of the fact that they will have to purchase from that store. What are they going to do? Run home and pick theirs up? No, they are going to buy what’s available, even if the price is sky-high.

Many college areas are like this, too. The retailers know that students need the items that they sell and that they probably will not travel to a different location to get them. Therefore, they can charge a higher price. This is not the case in every college town, but it does happen in many of them.

The best way to combat this is to purchase your items elsewhere. Take as much as you can with you from home. Every time you go home on break, stock up on what you can. Ask your parents to purchase what they can when the back to school sales are over. Also, shop online. You are bound to find your items much cheaper there.

Skip the Campus Bookstore

You do not have to purchase your textbooks at the campus bookstore. In fact, purchasing your items at the campus bookstore is a huge cost for college students- and an unnecessary one, at that.

Forego the bookstore and buy used textbooks online. Textbook Rush, Knetbooks, Thriftbooks, and Amazon are all excellent websites to get low-cost textbooks on. You can even rent any of the available books or choose to read the digital copy for much less than anything you could buy at the campus bookstore.

Use Delivery

Minimize your transportation costs by taking advantage of delivery. We all know that you can purchase just about anything on Amazon. At the time of this writing, Amazon is offering six months of Amazon Prime for free to students. After that six months, it is only $6.99 per month. That $7 could save you a ton of gas.

Learn to Cook

Eating pizza and fast food all of the time is going to cost you a pretty penny. Save some dough by learning to cook just a few meals. Even if you live in a dorm, you can have a hot plate to help you cook. You do not have to become Gordon Ramsay- just learn to cook enough to keep your food costs low.

Online Courses

As a person who has attended college both online and on-campus, I can attest to the convenience of online courses. If you have the option to take any of your classes online, you should consider it. It often costs much less to attend online courses.

Be careful of the classes you take online, though, as you are not getting all of the benefits- like asking your professor for help. Yes, you can do that with online courses, but it takes time to get a response. If the class is on a subject you normally do well in, you will probably be fine taking an online course. If you struggle with a subject, for instance, math, you should probably attend the live classes.

Talk to the Financial Office

Before you choose a college- before you turn down an expensive school or choose a lower-cost school due- talk to the financial office at the school. Sometimes, those higher-priced schools have more scholarships and grants they can give out than other schools. Some kids have gotten enough assistance from their schools that they end up only paying the tuition of a lower-priced school.

They say, “Don’t judge a book by its cover.” Well, you also should not judge a college by the “sticker price”. You should be more concerned with what is referred to as the “net price”. This is the amount of tuition you are left to cover after any grants and scholarships are applied. It does not matter if a college costs $10,000 per year unless you are stuck covering that entire amount.

If, however, your scholarships and grants cover $8,000 of that each year, you only have to worry about $2,000 of the tuition. That amount may be lower than what you would have to cover at your local community college. So before you make any decisions, determine the net price of that school.

Conclusion

You have many options to pay for your college. Except scholarships, there are also and student loans, credit cards for students, etc. Take control of your college costs and your financial future by cutting down where you can and making wise decisions. Doing so can help you avoid or minimize your student loan debt.

How to Repay Your Student Loan On-Time, Every Time

Posted on | by Carla Turchetti

Low angle view of happy group of six young cheerful graduates in black gowns, throwing up their head wear in the air and celebrating.

Congratulations on your college degree! You worked hard and you deserve it. But guess what? College wasn’t free. Even if you worked your way through your 529 savings, won a few small scholarships and participated in a work-study program, you might have had to take out a loan to bridge the gap. National student debt has soared to $1.4 Trillion. The total amount of money borrowed in mortgages is the only debt that is higher than this.  If you turned the tassel and then had to turn your attention to how much you owe in student loans, this is the guide to help you repay your student loan on-time, every time.

Handy Tips To Repay Your Student Loan On-Time

One tool for building good credit is to repay your student loan on time. The first thing you should do is set up auto payments with your bank. Pay off as much as you can every month. For borrowers who have never financed a car or had a credit card, the student loan is the first debt that will have an impact on credit history. It’s important to make the payments on time because the student loan late payments negatively impact your credit score. Your credit score is the three-digit number that reflects your creditworthiness. It’s the tool that lenders use to determine if you are a good borrowing risk and how high your interest rate will be to borrow.

Questions below will be your guide to make a good plan on how to repay your student loan on time.

When Do I Start Repaying Student Loan Debt?

If you financed your education with a federal student loan you have a grace period of six months after you graduate, drop below half-time enrollment or leave school, to begin paying back the loan. Interest accrues during the grace period and is added to the full amount of the loan. You can make those interest payments if you’d like with no penalty to you.

If your higher education loan is from a private lender, like a bank, you may or may not have a grace period. That will be in the terms of the original loan. The idea of the grace period is to give you a chance to get a job and some financial footing before payments begin. But just because you have a grace period doesn’t mean you have to use it. You can begin chipping away at what you owe if you start to repay your student loans soon as you can.

How Do I Know How Much I Have to Pay?

If you have a federal student loan the government will put it in the hands of a servicer and the servicer will send you a statement detailing what you owe, the amount of each monthly payment and when the payments are due. A private lender will generally do the same thing in a monthly statement that either comes electronically or through the mail.

What are My Repayment Plan Options?

The federal government offers a full menu of options for paying back their student loans. Student loan repayment plans generally fall into two categories – standard repayment plans or income-based repayment plans. The default status is a standard repayment plan, but you can apply to change that at any time during the course of the loan.

Standard Repayment Plans

There are three variations on a standard repayment plan

  • A standard repayment plan is set up for a fixed length of time and the monthly payment due is always the same.
  • A graduated repayment plan has monthly payments that balloon through the life of the loan. This type of loan assumes your income will rise over the years and you can afford a larger payment down the road than you can now.
  • An extended repayment plan stretches the loan out over many years. This lowers the monthly payment that is due but the longer terms and the extra interest that will accrue means that in the end, you have spent significantly more to repay your student loan.

Income-based Repayment Plans

Income-based repayment plans are based on calculations that look at your disposable income and what you can be expected to afford as you repay your student loan. They can be set up for varying lengths of time. These plans tend to be good for borrowers whose incomes are low or their debt-to-income ratio is high.

Why is it Important to Pay On-time?

Fulfilling the terms of the loan is good for your credit score. So is making timely payments over a lengthy amount of time. Both of those things build a credit history. A student loan is installment debt, meaning something that you pay for a fixed amount of time. That’s different from revolving debt, like credit cards, that are open-ended. The three top credit score reporting agencies, Experian, TransUnion, and Equifax, are looking for a mix of installment and revolving debt as a way to build a higher credit score.

Make a Budget

You have to plan to make that student loan payment each month. That’s where your budget comes in handy. A budget allows you to take control of your finances because you can clearly see what is coming in and what is going out. A budget eliminates haphazard payments to obligations that may or may not be made on time. How do you begin to budget?

Your budget can be a simple spreadsheet with rows and columns that allow you to add, subtract and plan. A more visual option is a budgeting app like Mint that allows you to set up a budget and then add bills to a dashboard so that you receive reminders when things are due. Another budgeting app is YNAB, or You Need a Budget, which works on zero-based budgeting, which means it takes into account only the money you absolutely have at that moment.

In its simplest form, a budget provides a snapshot of income versus expenses. So you begin the budgeting process with an honest assessment of income. Then you list your obligations. These include the cost of housing, food, utilities, transportation, insurance, clothing, and personal items. If you need to repay your student loan that goes right here in the obligation column. You should budget to set at least a little money aside for savings and there has to be some space for entertainment and eating out so you don’t feel completely deprived by your monetary obligations.

If you are following your budget you’ll have the money to repay your student loan on-time every month.

Learn How to Decrease Your Expenses

An important part of budgeting is also to track spending. If you haven’t ever laid your budget out in front of you, you might be surprised by what you see. There may be some glaring places to cut expenses. There might be subscriptions to services you no longer need or want. You might find expenses to try and renegotiate like the cost of cable television or your wireless provider. You may decide it’s time to learn how to cook and not pick up so much take-out during the week.

Your list of monthly obligations may include multiple student loans with different lenders and lengths of obligation and payments due at different times of the month. In that situation, you might want to consider consolidating your student loans.

Why Consolidate My Student Loans?

Consolidating student loan debt is one way to organize what’s due and get the monthly obligation paid on time. Consolidating all the debt into one loan gives you a really accurate picture of how much you owe how long it will be until you repay your student loan.

If you have federal student loan debt to consolidate, begin at studentaid.gov, the same place you always filled out your FAFSA, or Free Application for Federal Student Aid each year to determine your aid eligibility. The federal government allows you to consolidate your federal loans into one loan at no fee. Consolidating like this doesn’t change your interest rate, though. It will be based on the interest rates from your original loans.

You can also consolidate loans through a private lender, like a bank. You could choose to consolidate only your existing private loans or combine your private loans and federal loans into one payment. Consolidating like this allows you to compare interest rates, customize the length of the loan, customize the payments on the loan and even select the day of the month when the payment will be due. One word of caution about taking federal loans into a private consolidation program. Once the federal loans are out of the government’s hands you lose access to federal repayment and forgiveness programs.

Should I Refinance My Student Loans?

That’s a good starting question. You can only refinance a single student loan or group of student loans that are already in the hands of a private lender. You can refinance to take advantage of a lower interest rate or to change the terms so that the loan ends either sooner or later than the current payoff date.

If you turn to a private lender to repay your student loan by refinancing, that lender will look into your credit score, credit history, employment status and how well you have already done making payments on your student loan debt. In some cases, a private lender may require a co-signer to guarantee the loan. If you’re looking for a lendre, Loanry has some recommendations for you.

Should I Take Out a New Loan to Pay Off Student Loan?

Going to the bank and taking out a personal loan is one strategy to help you repay your student loan. This is probably only a choice for borrowers with very high credit scores. Otherwise, the interest rate is likely to be higher than the original student loan.

Should I Transfer My Student Loan Debt to a Credit Card?

This is generally not a good idea because the interest rates on credit card balances are usually higher than the rates on loan.

Can Any of My Student Loan Debt Be Forgiven?

Mostly, the federal government is looking for complete and on-time repayment of student loan debt. There is one program – PSLF, or Public Service Loan Forgiveness, that is for employees of the government or employees of non-profits. The lender might forgive the student loan debt after the borrower makes $120 monthly, qualifying payments while working full-time.

Some teachers who spend five complete and consecutive years working in low-income schools may be eligible to have student loan debt discharged.

If your school closes while you are attending or soon after you graduate your debt might be discharged. In the case of a permanent disability or death, they can also remove it.

Can I Pay More Than What’s Due Each Month?

An excellent strategy to help you repay your student loan is to make extra payments whenever possible. Reducing the total amount owed one payment a time can move you toward paying off the loan earlier than the terms.  There is no monetary penalty for paying more than the minimum on your student loan.

Another sound strategy is to make more than one payment a month on student loan debt. Even if you take the regular monthly payment and cut it in half and submit a payment every two weeks you reduce the amount of the loan quicker.

Any time you receive a little windfall of cash, maybe a bonus at work or an income tax refund, consider using it to make an extra payment on your student loan to accelerate the payoff process.

How Will I Remember When the Student Loan Payment is Due?

On-time payments go a long way toward building your credit and finishing your student loan. So it is very important that the lender receives the payments on or before the due date.

Consider some kind of system that will help you remember it’s time to make a payment. Maybe it’s an entry in your digital calendar on the day you should send the payment. Maybe it’s a reminder on your phone. Or maybe you use an app that sends you notifications to remember to repay your student loan.

Another strategy is to sign up to have the loan payment automatically drafted from your bank account when it is due. Sometimes the lender will offer a monetary incentive if you sign up for automatic drafts.

What if I Can’t Make My Payment?

The very first day after you miss a student loan payment the lending institution considers your account past due or delinquent. If you don’t get completely caught up with payments and interest by 90 days, your loan servicer will report your delinquency to credit reporting agencies. If you go further than that, the servicer can say that you defaulted on the loan and will demand complete payment of the entire amount of the loan and interest immediately.

Defaulting on a student loan negatively impacts your credit score and your future ability to borrow money at a reasonable interest rate. Your college or university may refuse to send copies of your transcript if you have defaulted on your loan.

If you are having difficulty making payments contact the loan servicer immediately to try and figure out a way to back on track with a loan repayment schedule.

Conclusion

If you graduate from college with student loan debt it is important to commit to paying the loan in full with on-time payments. Gather up information about your loan or loans and calculate the complete amount you owe, the amount of each payment, the due date of each payment and when you will pay off the debt if you follow the current terms. If the loans are federally-backed student aid you can research repayment options that can change the length of the loans and impact monthly payments. If you have more than one loan you can consider consolidating that debt into a single loan so that there is only one payment each month to remember. You can investigate what kind of interest rate private lenders would give you if you refinanced, and see if you can save money over the length of the student loan that way.

No matter what the payment or payments add up to or when they are due, it is important to commit to paying your educational debt. Your monthly budget should make it a priority to repay your student loan. Set reminders, mark a calendar or automate your monthly payments so that they get to the lender on time, every time. Faithfully paying down your student loan debt will not only build your credit for future purchases, when you get to the very last payment you will feel like you really accomplished something in your personal, financial life.

A Study Guide to Save Money on Your Student Loan

Posted on | by Julia Peoples

The cost of higher education is rising and all it seems to do is continue to rise. The national student debt, like all other debts, is on the rise. The price tag alone is enough to make people decide not to go to college. Do not be one of those people. Even with the rising costs, there is still a lot of value in a college degree. The good news is there are ways for you to get money to help you pay for college. One of them is a personal loan for students. Be careful with that option as it may not have the same favorable terms as other types of student loans. Even better news is once you have one, there are ways for you to save money on your student loan.

Tips For Saving Money Before Selecting A Loan

There are different ways to save money on your student loan but it is important to think about these items before you select your loan. This may sound like an obvious statement, but it has value, so I am going to say it. Borrowing less money will save the amount of money you owe for your student loans. You should keep in mind that there is interest on top of the actual amount of money you borrow. That interest increases the amount of money you have to repay. When you are determining how much money you need, you may forget that you have to pay it back at some point. You can find a job and make some money to pay for your college expenses so you do not have to borrow as much money.

Another way to borrow less money is to begin saving money ahead of when you need it. If you are going to school right now, it may be too late for you to save in advance. However, if you know you are not going to school for another few years, start saving money now. Save as much money as you can so that is less you need to borrow. You will be surprised at how much money you can save yourself in the long run.

What Are Some Types of Student Loans?

Before you can think about ways to save money on your student loan, you first must understand the details of a student loan. When you begin student loan shopping, you will find there are many different options available to you. A student loan is when you borrow money to pay for school and you make a promise to repay. The loans are for tuition, room and board, and books. Some student loans are for specific items. You may find a loan only to realize that it is for tuition only and you cannot use it for anything else.

Traditional Student Loans

With a traditional student loan, you can borrow money from a traditional bank or through a federally funded program. When you repay the loan, you are also paying interest on top of the money that you borrow. Loans come from different sources and each one may have unique benefits. Usually, the interest rate of a student loan is a fixed rate and often lower than other interest rates. You may not need a credit check to be approved for your student loan. Carefully consider all of your options when you are making decisions about student loans. They may have long term impacts on you and your credit score. Normally you do not have to repay the student loans until you graduate from college or reduce your status to part-time. Most loans have flexible repayment plans and are easy to finance or postpone.

Income Share Agreement

An income share agreement is much different from a student loan. An income share agreement is something you typically set up with the school in which you plan to enroll. However, there are other institutions that will set up an income share agreement with you. With this agreement, you are promising to pay back the money for tuition after you have graduated and have a job. You pay back the loan for your tuition with a percentage of your future wages. When you and the school agree to the terms of your loan, you are both projecting how much money you will make after graduating. You are making the assumption that you are able to find a job and will earn a certain salary. Even if you do not have a job, you are expected to repay this loan.

Getting a student loan from a credible lender is extremely important. You don’t want to get scammed. Loanry is here to help you make sure you’re on the right path.

A Cosigner could help you with a private loan

You can consider having a cosigner, such as a parent, and get a private loan. Even if you are able to get a loan without a cosigner, you might want to consider one because it could help you get a lower interest rate. You may not know this but when two credit scores are used for a loan, lenders look at the higher credit score and base the interest rate off of the higher one. This can help you obtain lower rates. It is also possible that you might be able to get a discount because you have a cosigner. You should remember that anyone that cosigns for a loan for you is also responsible for the debt. That means that the person is on the hook for paying the loan, too. If you default on the loan, then your cosigner is financially responsible.

Stay Away From Capitalized Interest

Do you know what interest capitalization is?

How to save money on your student loan - Example of capitalized interestIf you do not, you should. This is another way that you can save money on your student loan. When you take on student loans, you do not pay them until some date in the future. During that time you are not making payments, the interest may accrue. If it accrues, then it is capitalized by being added to the balance of your loan. This means that you will owe more money when it comes time to make payments.

This process can increase the cost of your loan by about 20 percent by the time you have graduated. If you have a loan that accrues interest as soon as you sign the paperwork, you should pay the interest as it is accruing. Doing this helps you can keep your loan amount from growing. Depending on your type of loan, it may capitalize on a monthly basis, which for you means the amount of the loan grows faster and a greater amount. Federal loans do not begin to capitalize until you start the repayment portion of your loan.

Can I Use My Student Loans As A Tax Deduction?

Yes, you can use the interest that you accrue on your student loans as a tax deduction. Keep in mind this will not save money on your student loan. However, it can help you with the amount of money that the IRS considers income when you file your taxes. You cannot use your entire loan amount as a tax deduction, but you are able to deduct up to $2,500 in interest. It does not matter if you have a private loan or a federal loan, you can still deduct the interest from your taxes. The great thing about a deduction of student loan interest is it is considered an above the line deduction so you will not have to itemize all of your deductions to claim it.

Can I Prepay My Student Loans?

One of the great things about a student loan is that they do not have prepayment penalties. Neither private not federal loans penalize you for paying your loan early. Some lenders charge you if you pay off your loan earlier than the timeframe they have given. There is no such penalty for student loans. The federal government actually has a law in place that prevents lenders from charging you for paying off your student loans early. This gives you free range to make as many payments on your loan as you would like. One of the ways to save money on your student loan is to make more than one payment per month.

Even if you can make a second payment in the full amount, any amount you can pay helps reduce your student loan balance faster. This helps you save money because you are reducing the amount of interest you have to pay on the loan. The interest accrues over the time you take to repay the loan, so the less time you take to pay the loan, the less money you pay in the long run. Paying more money each month can actually save you thousands of dollars in interest. Making the sacrifice to pay the extra money is worth it because it saves you in the long run. Even making an extra payment every two months can help accelerate the time it takes you to pay the loan.

Can I Consolidate My Student Loans?

You can also save money on your student loan by consolidating your loans. This allows you to combine all of your loans and debts into one payment, with hopefully a lower interest rate. This allows you to get your debt under control when you graduate and at the beginning of you needing to repay your loans. One thing to consider when you are considering consolidating your loans, it may have a negative impact on your credit score. You are taking on a new loan, which adds to your debt and that may cause your credit score to go down. There is a period of time when you consolidating your debt when you take on the new loan but the old loans are not paid off, which increases your debt substantially. Once the old debt is paid, the amount of debt you have goes down and your credit score may increase.

What Is Student Loan Forgiveness?

Another way you can save money on your student loan is to see if you can have your loans forgiven. A word of caution when it comes to loan forgiveness is that some programs are called loan forgiveness but are just consolidation programs. When a program claims to be a loan forgiveness program, it comes from the federal government. Any program from anywhere else is not a true loan forgiveness program. They are not easy programs for which to be approved.

You can only qualify for many of these programs after you have made payments on them for a certain number of years. Those payments must be timely and for the correct amount. There are also some specific degree programs that qualify for loan forgiveness. Public service, teachers, and doctors typically qualify for loan forgiveness. If you are in a public service field, you have to make payments for about 10 years before you can get forgiveness, but at that point you can qualify for 100 percent forgiveness. Teachers working for a qualifying school for at least five years and then you can qualify for loan forgiveness for anywhere from $5,000 to $17,500 in student loans.

What Student Loan Forgiveness Options are Available?

How Do I Qualify For Forgiveness?

If you can qualify for loan forgiveness, you can potentially save money on your student loan. There are websites that provide information on student forgiveness and potential repayment plans. These websites allow you to fill out some information that gives you an idea of what type of forgiveness you may be able to receive. You can also determine the balance of your student loans and gives you the ability to have some control over your payments.

You may not qualify for forgiveness for your student loans. But you may be able to qualify for a lower repayment plan. And you may be able to get an incomes based repayment which is based on your income level. You may be able to qualify for a payment that is based on your earnings. When you earn more money, your payment amount goes up. When you are making a lower income when you first start employment, you can have a lower payment amount. It is possible that you might be able to qualify for a minimum monthly payment of $0. You do have to apply for this once a year to re-certify the repayment plan that you have. It is something that is reviewed on a yearly basis.

Can I Get A Lower Rate For My Student Loans?

There are a few ways you can save money on your student loan by getting a lower interest rate. One way to get a lower interest rate is to refinance your student loans. When you refinance your loans, you are getting a new loan at a better interest rate. The new lender pays off the debt to the old lender and then you repay the new lender each month. By getting a lower interest rate, you can reduce your monthly payment amount. If you get a lower payment amount, you can still continue to pay the old higher amount to pay off the loans faster.

Another way to get a lower monthly amount on your student loan is to have your payments automatically deducted. Many private lenders and federal loans offer a discount when you allow them to deduct your payment directly from your checking account. You could get a reduction of as much as .25 percent from your student loans when you allow the lender to take the money directly from your account. This allows the lender to take the money on the day it is due instead of waiting for you to mail them a check. There is no doubt that you are going to pay the lender because they are automatically taking the money from your account.

Conclusion

This article provides you a large amount of information about how to save money on your student loan. You should have all the information about student loans before you make a final decision on how to move forward. There are many options available to you and you may have to choose more than one option to be able to have enough money to pay for college. Student loans have long repayment periods, so you will be paying the loans for a long time after graduation.

As a result, you should make sure that you fully understand what you are agreeing to when you take on a loan. Once you have the loan and you have finished school, it is time to starting making those payments. There are many ways to save money on your student loan. You should be aware of them. That way, when the time is right, you can make the best decision for you. That decision may be different over time, so you should know what options are available as you go through the repayment process.

What Student Loan Forgiveness Options are Available?

Posted on | by Brandy Woodfolk | Leave a Comment on What Student Loan Forgiveness Options are Available?

A few days ago, I received a notice in the mail that my student loan payments are coming due. I had been dreading the payments for years, but I was honestly shocked at the amount of my monthly payments: $1153.35. Who has that kind of money left over each month? Not me. I do not mind paying what I owe, but good grief, that is more than I can handle at once. I am on a mission to figure out another way, and I want to share my research with others in my predicament. We are going to take a look at ways to prevent needing student loans, student loan forgiveness, and alternative repayment options.

What Happens If I Do Not Pay?

Before we look at student loan forgiveness and repayment alternatives, let’s be clear on how non-payment of loans can hurt you. It goes beyond showing up on your credit score. These are federal loans we are talking about. The federal government has the power to get their money back in any way they can. This means that if you do not pay, they can garnish your wages- something most people cannot afford. They can also keep any tax refund payments you are should receive. It just is not worth the risk. Instead, put in the work to get one of the following options working for you.

Loan Forgiveness Programs

You hear about student loan forgiveness programs all the time, but it really is not what you think it is. In fact, if you call most of those places that offer loan forgiveness, they are actually loan consolidation places that want you to pay them to consolidate your loans. The only way to get any kind of student loan forgiveness is through the federal government’s approval, but it is not so easy.

Most student loan forgiveness programs are only available after a set amount of years of payments- yes, years. For instance, some student loan forgiveness programs only apply after 20 or 25 years of on-time payments. If you are screaming, “But I can’t afford my loan payment,” it’s okay. In a moment, we will talk about getting those payments lowered until you qualify for forgiveness.

Before that, though, it is important to note that some degree programs are offered student loan forgiveness for other reasons. Here are some examples:

Public Service Loan Forgiveness (PSLF)

There is student loan forgiveness is for people who choose to work in public service jobs. It does not kick in immediately, though. You will still need to make 120 payments- that’s about 10 years. However, if you do this, you qualify for 100% forgiveness.

Резултат слика за public service loan forgiveness infographic

Teacher Loan Forgiveness

If you are a teacher and work at a qualifying school for a minimum of five consecutive years, you can receive anywhere from $5,000 to $17,500 in student loan forgiveness.

-You will also find student loan forgiveness programs available for doctors and other health care workers, lawyers, and possibly a few other careers if you work for qualifying companies.

How Do I Qualify?

By visiting studentloans.gov, you will be in front of a wealth of information about student loan forgiveness and repayment plans. By filling out some information, you should receive a summary of what you can qualify for. This will also show you your student loan balance and let you control some parts of payments you make.

What Do I Do If I Do Not Qualify?

Even if you do not qualify for student loan forgiveness, you can likely qualify for much lower repayment plans. These include:

  • Income Based Repayment (IBR)
  • Pay as You Earn (PAYE)
  • Income Contingent Repayment (ICR)

Each of these can help lower your payment. Some people will even qualify for payments as low as $0 per month, but you have to recertify, usually once per year.

Student Loan Consolidation

If you do not qualify for student loan forgiveness, another option you have is student loan consolidation. You can shop around for a loan company that will offer a lower payment and lower interest rate. You will still be paying your payment every month, put it will only be one payment. And it should be way less than my $1153 payments, especially if you shop around enough. In fact, loan consolidation may give you a much longer repayment period. If there are no other options in your path, take a look into consolidating your loans.

Current Student Loans

Everybody Has Student Loans, So Why Should I Worry About Them?

If you have even been paying the slightest bit of attention to the news lately, you know about the national student debt crisis in America. The specifics? Approximately 43 million Americans owe student loans, and do not think that is only the broke folks. Even doctors who make excellent money work for years to pay off their debt.

Of the 43 million Americans that owe student loans, there is a total of about $1.5 TRILLION dollars of federal student loan debt- just federal. There is another $119 billion in private student loan debt. Is your head swirling yet? As sad as it is to see such numbers, I must admit- guiltily- that I am actually glad I am not the only one drowning in it.

Due to this immense amount of debt, it is easy to see that most people have student loans on their credit. At the same time, those same people still get credit elsewhere. It has become almost commonplace among many to think, “Well, if everyone has student debt, it can’t really hurt my credit that bad, can it?”

It actually can, but it does often get viewed a little different from other debt. Let’s be clear about how, though. If you go in to apply for a loan and you owe student loans, lenders do not view that debt as heavily as they do others- not usually, anyway. Yes, most people have student debt so it is not viewed quite as negatively.

However, if you default on your payments, it will be viewed in negative light. If you are not in default, your student loans say something such as, “Paid as agreed”, on your credit. So yes, they are a factor, but according to your credit, they are being taken care of. Once you default, it becomes a problem.

Additionally, for lenders who only look at your score, not the items on your credit, your student loans can hurt your debt to income ratio. The best thing you can do is make the payments on time as much as possible. If your payments, like mine, are way too high for you to pay, there are other options.

Understanding Student Loans

Now that you’ve found the information you came for, let’s go over the basics. Yes, student loan forgiveness is something we all think about. But for those of you that don’t yet have them, the next couple of sections are very important. So don’t skip them.

Most people sign for student loans with no real thought about it. They know it is a loan that helps them pay for college, but most people do not truly understand how they work. Since student loans are the norm, they just accept them and jump in head first. Let’s remedy that.

On the basic level, student loans are loans with which to pay tuition and other school and living expenses. They do have to be repaid with interest, but that interest is lower than most other loan types. With some, you owe nothing while you are in school. With others, you will have to pay interest while in school. There are also some that will require full payments while in school. We will break these all down in a moment.

There is no extra step you need to take to apply for student loans. When your desired school receives your FAFSA and the results, they will tell you how much aid you can get from which categories, including loans. If you choose to accept them, the school will send you the necessary paperwork to fill out.

Types of Student Loans

Резултат слика за private vs federal student loans infographic

There are two main types of student loans: federal and private. Private loans are much easier to understand, so let’s get those out of the way first.

Private Student Loans

These loans come from lenders not affiliated with the federal government, such as the college itself, a state organization, banks or credit unions, and in some rare cases, individual investors. Private student loans are similar to most other private loans. They usually require a credit check and often require a cosigner. Your payments often have to begin while you are in school. Also, the interest rates may be variable- they have gone up to 18%- and that interest may not be tax-deductible. While these can be very helpful to fill when you need just a little extra, they should be a last resort.

Federal Loans

Now for the more complicated loans. Federal loans are the most common type and come in different shapes and sizes, so to speak.

Stafford Loans

You have probably heard of Stafford Loans at some point. They are broken down into the following:

Direct Subsidized Loans

Direct subsidized loans are available to undergraduates only if there is a financial need. With these, nothing is due while you are in school because the government pays the interest. Additionally, they pay the interest during any times of deferment you may go through.

Direct Unsubsidized Loans

Direct unsubsidized loans are awarded to both undergraduates and graduates depending on the cost of attendance of the school and the amount of any other aid that you receive. With these, you pay the interest the entire time you are in school.

Direct PLUS Loans

These are available from the U.S. Department of Education to graduates and professional students. Direct PLUS Loans require a credit check and a favorable credit history.

Other things to know

For the most part, there is no need for a cosigner or a credit check- except for the PLUS loans. Typically, the interest rate stays the same until the loan is repaid. Also, the interest is tax-deductible. If you are making payments on your student loans, you will receive a 1098 e that you can file with your taxes.

Future Student Loan and Financial Aid Planning

Is There a Better Way to Pay for School?

If you are not yet in college, have not graduated, or are preparing to send your kids to school, you still have a chance to pay for tuition and other expenses. These are some:

Look for a Tuition Free School

Yes, they exist. They are not, on the other hand, very well advertised, so you will need to do some research. If you find one you are interested in, all of that hard work will pay off.

Pell Grants

Pell grants are available, but there is a cap on them. Usually, it is enough to cover two-year schools or programs, but that may vary depending on which one you choose. It is never a bad idea to at least start at a school where tuition covers the first couple of years. You can always move on later.

Scholarships

You likely know that some people get scholarships, but they are usually for sports, great grades, and music. That’s what we hear of the most, anyway. There are actually many other scholarships you can get for a wide range of things.

Contests

If you are gifted in writing, science, or a few other subjects, there are contests held through the year. Some prizes include scholarships while others include cash prizes, and those cash prizes can range from $50 to the thousands. Both the scholarships and the cash can help you out with college costs, so do an Internet search to see what is available in your field of interest.

Work Study

Work study is a federal program that helps students with the funding needed for college through part-time employment. This may or may not be ideal for you, but give your school a call to see what is available.

Pay As You Go

There is always the option to pay for your college one semester at a time. This would require some extra work, but it could help you walk away from graduation free from loans. Try picking up extra shifts at your job during the summer. Babysit, do yard work, tutor, or anything else you can on weekends. Even if you can only cover one semester your entire program, that can save you thousands in loan costs.

Tuition Reimbursement

There are employers that will reimburse your tuition costs after graduation, and some who will assist while you are in school. Talk to your current employer or do a search for other employers who provide this type of program to find out the ins and outs of their particular program.

Tax Credit

While you are in school, there are two different tax credits that you can apply for: the American Opportunity Tax Credit and the Lifetime Learning Credit. Apply for these credits and then use that credit money to go towards your college costs.

Crowdfunding

There are a lot of people who do not want to try it, but crowdfunding has become a big thing. You plead your case on platforms such as GoFundMe. Tell the crowd what you are trying to do and give them a good, compelling reason why. Often, at least a few people will try to help you out. Remember, anything you can raise in other ways means that it will not be coming out in loans.

Fundraisers

Many organizations have learned to harness the power of fundraisers. There is no reason you cannot see doughnuts, too. Give it a try and see what you can do.

Military-based Funding

If you, your parent, or your spouse has served in the military, there is an aid for those who qualify. Your school can usually help you figure out what you qualify for and how to go about getting it.

Traditional Student Loan Versus An Income Share Agreement

Can I Cut the Amount of Loan I Need?

If you cannot get around needing a loan, there are ways to cut down on the amount you have to borrow. The following are just a few ideas, but talking to your financial aid assistant at school might help you come up with some of other ideas.

Attend Classes in the Summer

Summer classes are quite often much cheaper than other terms. If you can attend at least some classes during the summer, or other discounted times, you can save a lot. Check in with different schools to see who has terms that you can save on.

Pay for Living Expenses Yourself

When you are offered your financial assistance package from your school, there is usually assistance that is in addition to school costs. If you take out student loans, you will often be offered assistance with living expenses. Basically, you can get the maximum semester amount. After tuition is taken out, the remainder can go to you as a check or bank deposit that you can then use for basically anything.

As I have always attended online school, I have always used my additional amount to pay for my Internet or computer equipment. Some people use it to help with rent or monthly bills so that they do not have to work so much while also trying to attend school. I tend to regret accepting it. Yes, it helps at that time, but it also adds on to the amount I owe.

If you can afford to pay your own living expenses while in school, do that instead.  It comes down to priorities, really. Do you want the convenience now and the headache later, or do you want to work a little harder now and have less of a headache later?

Cut Down Material Expenses

My current college adds the materials fee onto the tuition, so I really have no choice this time. However, the school I went through for my Associate’s and Bachelor’s degrees let you be in charge of your own materials. You had the choice to just let them send the textbooks to you and add that into your tuition, but you could also order your own.

When I was a newbie, I just let them add it on to my tuition because I did not know any better. One day, though, I saw the prices of those texts: $175, $310, $279, and so on. Call me cheap if you want to but that was an awful lot of money to spend on a textbook I was probably never going to look at again after class. In fact, I can honestly say that after five years of school, there were only two books I referred back to which were Psychology and Finance, but that was only because I love those topics. I really could have found the information online.

You can get used textbooks, or even find them online for a lot cheaper. I quickly discovered two websites that offered even lower options: Textbook Rush and Knetbooks. I could find the textbooks that were costing me hundreds from for $10, $20, or $30- sometimes more and sometimes less. Even better, you could rent them instead of buying them or choose the digital version for cheaper.

Live Off Campus

Living and eating on campus will add to the cost tremendously. Try to live off campus instead. Find a couple of schoolmates to share a place with, pay your parents $100 a month to stay with them, or even rent a small place ten minutes from campus. Any of those will cut your costs down a lot. And, while I suggest eating at home as much as possible, even eating a burger at a nearby drive-thru is usually much cheaper than eating on campus.

Community College or Certificate Programs

I am about to lay down some truth here that will likely have my grandmother rolling over in her grave and some parents wanting to take off my head, but I think I will risk it. I was told my whole life that you have to have a college degree to make it in life. From the moment I can remember, some family members told me that college was a life or death situation, and I was scared into believing that was true. Well, it’s not. It is not necessary. In fact, there are many people who did not attend any college that are making it through life much easier than those that have a college degree.

I learned too late that I should have considered other options. After receiving my Associate’s Degree in Business Administration, I thought that I could at least get my foot in the door somewhere. Instead, I was told I needed either a Bachelor’s Degree or experience. And, of course, that left me wondering how I was supposed to get experience if I could not get hired.

I made the choice to re-enter college for my Bachelor’s Degree, telling myself that this was it. This was the answer to my problem. I graduated and went out to put in applications and got more surprising news. The only thing I could get hired for was an entry level position paying $8 per hour. I wanted to scream. At this point, I was in all of this student loan debt so that I could make less than I was making waiting tables?

Still Not Enough

My school eventually helped me land a job as a manager at a local mattress store, but I was still only making a little over minimum wage. I let someone convince me that if I really wanted to make it, I needed a Master’s Degree. And I really just wanted to give my kids a good life, so I listened and entered a Master’s program for Project Management and hit the ground running. I thought everything was going great until I got smacked in the face with some irritating realizations.

First, I was the only manager at this chain of retailers that had a degree…period. I could have gotten that job without going to school at all. In fact, my hiring manager told me that my degree had nothing to do with why they hired me – it was just a bonus.

Second, the project manager at this company also had no degree and no project management training. I wanted to scream. I felt like I had just wasted the last five years of my lifetime I could have spent loving on my kids more and working towards a career I wanted instead of a degree. It was disheartening.

The Point

The point of my rant is to say that most career fields do not need a degree. Obviously, if you want to be a doctor, nurse, or a couple of other things, you need school and training, but I would definitely want to know what I was doing if someone’s life was in my hand anyway. There are other fields, though, that apparently require nothing but an application and a willingness to learn. This is actually exciting news for most people.

Before jumping into college, do some research to find out exactly what education you need to do what you want to do. It may be nothing. You might be able to do some self-studying at home and learn what you need to. Companies may just want a fresh face that they can hire and mold. It is better to check before spending thousands of dollars and hours of time on something that is not necessary.

Also, if you need some education, or you just feel that you would be more confident with it, consider a two-year community college or even a certificate program. Pell grants often completely cover community colleges. Most certificate programs are, too. There are plenty of options available that can get you training and get you to work faster, so explore all of your options.

Conclusion

Trying to repay your student loans can be stressful, especially when your payments are more than your monthly rent. Fortunately, there are options that can help borrowers pay back with more ease. Take some time to research options available to you and apply. Always keep loan consolidation on your mind in case no other options work out as you need them to.