The pursuit of higher education is quite expensive, and as a result, many people apply for student loans to go through their universities. Piling up too much debt is not always a good idea, but it is the only way that most people have to go through so that they can access the highly-priced higher studies.
Repaying your student debt will not be a problem until you graduate, and you realize the enormous pile of student debt that you have to pay off. Student debt repayments will likely take a huge toll on your finances, especially if you’re making entry-level money. However, there are some avenues through which you can ease the repayment burden.
Consider subscribing to a loan forgiveness program
If you are having a hard time repaying your student loan debt, consider applying it to a loan forgiveness program through public service. These are usually provided through non-profit organizations, public service organizations, and even schools. There is, however, a tradeoff. You might be required to work as a volunteer, focus your skills in a particular area, or even join the military.
The downside to this is that you might have to shift into an occupation that you did not want, although it is a matter of choice. The military offers such programs so that they can secure more soldiers, especially when the number of people willing to join the military voluntarily is low. Providing an incentive allows them to secure more recruits. In this case, the incentive might be the forgiveness of part of your student debt.
Student debt refinancing
Debt refinancing is an avenue used by many people to restructure their debt repayments, and this approach can also be applied to student debts. You can refinance your student loan by negotiating lower interest rates, but this may depend on your income level. Doing this means that you can pay lower monthly payments than before. Although this means your loan repayments will stretch out a bit longer, it also means that your debt repayment burden will be lower.
If you have multiple student loans, consider consolidating them into one. This may also allow you to negotiate easier payments, thus reducing your monthly repayment burden. However, you should ensure that you maintain a strong credit score if you want to pursue this option. A strong credit score will give you better bargaining power.
Use PAYE to make your repayments easier
Pay As You Earn or PAYE is a concept that is mainly used to deduct expenses from your salary automatically. It is mainly used in deducting taxes, but it can also be used for loan repayment. PAYE has two major advantages. The deductions are calculated as a small percentage of your average income, and then once your salary increases, the deductions for the student loan repayment increase proportionately. The beauty of this approach is that you do not have to worry about keeping up with your student loan repayments. Also, you get some debt relief, which effectively reduces the amount of student debt that you will pay.
You can also use another feature that is similar to PAYE called Income-Based-Repayment (IBR). This is more suitable for a person that has student debt because loan repayments are determined using a sliding scale that evaluates the user’s income. The sliding scale determines what the student holder will pay based on their income rather than the amount of student debt they owe. It is also ideal for students because more students can meet the IBR qualifications than PAYE qualifications.
The above options.