Student loans are a huge burden for many Americans. Most college graduates finish college with tens of thousands of dollars in debt, which is huge when you’re just starting out.
Unfortunately, bankruptcy isn’t an option for dealing with student loan debt, and lenders can even garnish you wages to collect. Therefore, your best course of action is to try your best to pay them off.
It may not be easy, but we’ve got some tips that might help.
Check your employee benefits.
Not all, but some companies – especially larger ones – sometimes offer help with student loan repayments for their employees. Talk to your human resources manager to see if your benefits include anything like this.
If you haven’t graduated yet, you might also want to see if your employer offers tuition reimbursement as well.
Set up automatic payments for your student loans.
If the money is sent automatically, you’re less likely to accidentally spend it. Like they say – out of sight, out of mind – right? By setting up automatic payments, some lenders may even slightly reduce your interest rate.
Pay extra if you can.
Like with any loan, it’s always beneficial to pay more than the minimum if your income allows for it. This helps reduce how much money you spend in interest over the long term. Additionally, or alternatively, you can also make extra payments whenever you have money to spare.
Consider enrolling in an income-driven repayment plan.
Income-driven repayment plans, often called IDR plans, help lower your monthly payments and can eventually even lead to debt forgiveness. For qualifying federal loans, payments may be lowered to 10 to 20-percent of your income. After 20 to 25 years, any remaining debts are forgiven.
However, are some tax implications. When your remaining debt is forgiven, you’ll be forced to claim the amount as income for that year. That means you’ll also have to pay taxes on it.
Ideally, you should only utilize an IDR plan in certain circumstances. If you’re completely unable to make your current monthly payments and are at risk of defaulting or incurring severe penalties, it may be your best option. However, IDRs are often best used as a short-term solution.
Choose your career path wisely.
Certain public service career paths may offer forgiveness or repayment for student loans. Typically, these include jobs in law enforcement, education, non-profit or government sectors. Your remaining balance may be forgiven if you’re able to make ten years of payments through a federal IDR plan.