First, understand your repayment terms, specifically the current term of your loan and the interest rate. Can you get a lower interest rate if the loan amount is automatically debited from your checking account each month?
If you find yourself in financial difficulty and have federal student loans, the federal government offers several income-driven repayment programs (IBR) to certain borrowers that tie your monthly loan payments to the amount of your discretionary income and family size, with all debt being forgiven after a certain number of on-time payments. Research more to see if you qualify. As an alternative, you might consider an extended repayment plan or a graduated repayment plan. With an extended repayment plan, the loan term is extended more than ten years which will lower your monthly payment, but you’ll pay more interest over the life of the loan. With a graduated repayment plan, your monthly payments will start off lower, but then they will increase over time as your income hopefully increases and you are better able to afford the higher payments.
If these choices aren’t available to you, you must find a way to budget for your student loan payments. Review your household income and expenses. Can you reduce your spending on entertainment, luxuries, and discretionary items and use these saved funds to pay your student loans? You are always permitted to prepay the principal of student loans, partially or in full, without penalty.
If you have several loans, would consolidating your loans make the payment schedule easier? Check with your current lender to see what options you might have.
Are you in a position to take on a second, part-time job? The income from this job could be used to reduce your student loan indebtedness. Can you devote a tax refund, gift money, or inheritance to principal prepayment? Even infrequent payments of this sort will ultimately reduce your loan balance and save you both time (repaying the debt) and money (the interest on the debt).
And finally, consider your job. You may be surprised to discover that some or all of your indebtedness can be forgiven if you are employed in certain public-service sectors, teach in teacher-shortage areas, or go into the Peace Corps.
If you have questions, contact the experts at Henssler Financial:
- Experts Request Form
- Email: experts@henssler.com
- Phone: 770-429-9166
Disclosures: The following information is reprinted with permission from Forefield, a division of Broadridge Financial Solutions, Inc. The investments referenced within this article may currently be traded by Henssler Financial. All material presented is compiled from sources believed to be reliable and current, but accuracy cannot be guaranteed. The contents are intended for general information purposes only. Information provided should not be the sole basis in making any decisions and is not intended to replace the advice of a qualified professional, such as a tax consultant, insurance adviser or attorney. Although this material is designed to provide accurate and authoritative information with respect to the subject matter, it may not apply in all situations. Readers are urged to consult with their adviser concerning specific situations and questions. This is not to be construed as an offer to buy or sell any financial instruments. It is not our intention to state, indicate or imply in any manner that current or past results are indicative of future profitability or expectations. As with all investments, there are associated inherent risks. Please obtain and review all financial material carefully before investing. Henssler is not licensed to offer or sell insurance products, and this overview is not to be construed as an offer to purchase any insurance products.
