Student loans are exempt from bankruptcy. This means if you decide to declare bankruptcy, the court will not forgive your student loans. You will still need to pay them off in full. Perhaps you borrowed too much to attend school. Student loans may be crippling you financially, making it difficult to manage your monthly expenses. There are options to consider if have difficulty making payments.
Consolidate Your Student Loans
If you find it difficult to pay off loans after graduation, consider student loan consolidation. It lets you consolidate the loans into one monthly payment and extend the length of the loan, resulting in lower payments. You can only do this once. Consolidation locks in the current interest rate, so try to determine that the rates will not drop any lower before you consolidate your student loans.
Income Based Payments
Federal student loans allow you to sign up for income-based payments. The formula considers your total household income and the number of people in your family. They will assess your income every year to see if you continue to qualify for the income-based payment option. If you make payments on time for 25 years, you can qualify to have the remainder of your loan forgiven by the government.
Hardship Deferment Options
Another option is to apply for hardship deferment by contacting your lender and asking for one. This allows you to put your payments on hold temporarily. You can use the hardship deferment when you are out of work or when an emergency strains your financial resources.
The deferment will expire, and you can only put your loan on deferment for a set number of months during the entire life of the loan. This option lets you catch up on other payments or cover your necessities so you can pay off the loan when the deferment runs out.
Student Loan Forgiveness
There are student loan forgiveness programs for public workers and teachers. If you work for Teach for America, you will receive a yearly stipend you can put toward your loans. Most states offer student loan forgiveness if you teach in the state for a set number of years. If you work for a nonprofit or government agency and make payments for 10 years, you can qualify to have the balance of your loan forgiven. These programs only work for federal student loans.
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