If you’ve funded yours or your child’s education with federal student loans, you already know how difficult it can be to repay those loans. In fact, student loan debt can cause major financial struggles, even for those who turn to bankruptcy. Federal student loan debt cannot be charged off in bankruptcy, so it will be on you to ensure that it is repaid no matter what. However, there are some things that you can do that may help ease the burden of high student loan repayments each month.
Request a New Repayment Plan
Once you begin making your student loan payments, borrowers are typically signed up for a standard repayment plan with a goal to pay off the loans within so many years. Some lenders may set up a ten-year plan while others could be more, or less. They will also have a standard minimum monthly payment based on your loan amount.
The standard repayment plan is great at helping you pay off your debt quickly, but it can be difficult if you are not currently making enough money to support those high payments. To avoid that situation, you can request a different repayment plan from your lender. There are several options to choose from, such as extended repayment plans, income-based repayment, and graduated repayment. You will have to apply and be approved for these repayment plans, but they can help dramatically reduce your monthly payment.
Another way to save on your student loan is to consolidate all loans into one payment. Different lenders buy most all student loans while you are in college, and chances are you are making payments to multiple lenders each month. This means you are also paying interest to all the different lenders that hold your loans. Instead, you can consolidate your loans into one loan with one interest payment. Be sure to check repayment calculators and with your lender as well to ensure that you will receive a better interest rate before moving forward. Depending on your situation, leaving your loans with multiple lenders could be a better deal.
Request a Forbearance or Deferment
For those who are truly unable to repay student loans, forbearance and deferment may also be an option. These options allow you to pause your repayment for a period while you get your finances back into shape. Deferment is a more ideal option because you will not be charged interest on your loan while it is on hold. Interest will continue to accrue with forbearance. You will need to request and be approved for both options. You cannot simply stop paying your loans, so be sure to go through the proper process.
If you know that you are going to have issues with repaying your federal student loans, its best to deal with it as soon as possible to prevent default. If you need more ideas on saving money to help you make your monthly payments, be sure to visit the SideMoney blog for helpful tips. You can also sign up for SideMoney to make some extra cash to help offset your regular bills.