As many college students graduate and move on with their lives, they take along a heavy burden of debt. Though starting out in life with this debt is difficult, there are some sources of assistance for students who are struggling to make their student loan payments. From reduced payments to actual forgiveness of some or all of the debt, graduates should know what options are available and choose the options for assistance that best meet their individual needs.
Reduced Payment Amounts
Graduates with a student loan through the U.S. Department of Education have numerous repayment plans to consider. Each of these plans will offer different monthly payment amounts that can fit most budgets. For example, graduates can extend the loan repayment term, can choose a graduated payment schedule with low payments now and larger payments in the future and loan payments based on income. Graduates with loans from private companies may not have as many options, but they should contact their lender to determine what is available.
Forbearance
Holders of both public and many private student loans may qualify for loan payment forbearance. Forbearance is a temporary elimination or reduction of the monthly payment on the loan. While getting an approved forbearance will not help with the amount of debt--it will actually continue to grow as the interest continues to accrue during forbearance--it may allow a struggling graduate time to improve her financial situation. Various types of forbearance options are available for different situations that may impact a student's ability to make the monthly payments. Students will need to contact their lender to determine eligibility.
Loan Forgiveness
Graduates who work in social service, education, public service or nonprofit jobs may be eligible for loan forgiveness. One program through the U.S. Department of Education allows graduates working in the field of public service to receive forgiveness of the balance of their loan after 10 years of payments. Graduates serving in the military will likely qualify for some amount of loan forgiveness as well. The human resources department of eligible employers will be able to provide more information to graduates. Many state and local governments as well as private employers also have programs that pay for some portion of an employee's student loan debt. Volunteering through the AmeriCorps, Volunteers in Service to America (VISTA) and Peace Corps will also make graduates eligible for some level of forgiveness.
Loan Consolidation
Loan consolidation is another process that may provide graduates some relief from their student loan debt. Loan consolidation combines all of a graduate's existing loans into one new loan. By consolidating loans with the U.S. Department of Education, students may qualify for lower interest rate loans, which will reduce the amount of the monthly payment for the debt. Other benefits include eligibility for reduced payment amounts and making one payment instead of multiple payments.
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