Best Options if You're Struggling to Pay Your Student Loans
Student loan debt is a huge problem in America. According to the Federal Reserve, there is over 1.5 trillion dollars of outstanding student loan debt in this country! If you are one of the millions of people who are struggling to pay your student loans, don't worry, you're not alone. In this blog post, we will discuss some of your best options if you are finding it difficult to make your monthly payments.
Public Service Loan Forgiveness
PSLF is a program that forgives the remaining balance on your Direct Loans after you've made 120 qualifying monthly payments while working full-time for a qualifying employer. To be eligible, you must be employed by a government organization, a non-profit organization, or a private company that provides certain public services. You also need to make your payments through an income-driven repayment plan. If you think you might be eligible for PSLF, it's important to fill out and submit the Employment Certification Form annually or when you change employers.
Teacher Loan Forgiveness
The Teacher Loan Forgiveness Program offers up to $17,500 in loan forgiveness for eligible borrowers who have been teaching for at least five years. The program is open to teachers who teach full-time in low-income schools or in certain subject areas, such as mathematics or science. There are also a number of state and local programs that offer loan forgiveness for teachers. These programs often have different eligibility requirements, so it's important to research the options before deciding which one is right for you.
Closed School Discharge
According to Forbes, "The US Department of Education offers closed school discharge as an option for federal student loan borrowers who were unable to complete their program because their school closed while they were enrolled, or if they withdrew within 120 days before the closure." This option may also be available if your school closed on or after February 1st, 2019. You must have been unable to complete your program because your school closed while you were enrolled, or if you withdrew within 120 days before the closure in order to qualify. If you're approved for a Closed School Discharge, your loan will be discharged and you will no longer be responsible for repaying it. You can typically apply for a Closed School Discharge online through your loan servicer's website. If you're not sure who your loan servicer is, you can log in to "My Federal Student Aid" to find out.
Perkins Loan Cancellation and Discharge
Depending on your field of employment, you may be eligible for Perkins Loan Cancellation and Discharge. If you work in a public service or non-profit sector, you may have some or all of your Perkins Loans canceled. To have your loan discharged, you must prove that you are unable to repay the loan due to circumstances such as permanent disability. You may also be eligible for discharge if your school closes before you complete your program of study, or if you are the victim of certain types of fraud. If you are struggling to make your student loan payments, these cancellation and discharge options may provide some relief.
Total and Permanent Disability Discharge
This option is available to borrowers who are unable to work due to a disability. In order to qualify, you must provide documentation from a physician that indicates that your disability is expected to last for an extended period of time. If you're approved for a TPD discharge, your remaining loan balance will be forgiven and you will no longer be responsible for making payments. Another option is to file for bankruptcy. However, this is generally considered a last resort as it can have significant negative consequences on your credit score. If you're struggling to make your student loan payments, be sure to research all of your options so that you can find the best solution for your situation.
Revised Pay as You Earn Repayment Plan
If you're one of borrowers, you may be considering a Revised Pay As You Earn Repayment Plan (REPAYE) as an option. This type of plan can offer some significant advantages, including lower monthly payments, the ability to pay off your debt sooner, and the possibility of having your remaining debt forgiven after 20 or 25 years. However, there are also some potential drawbacks to consider, such as the fact that your monthly payments could increase if your income goes up, and that you may end up paying more interest over the life of the loan. Before making a decision, it's important to weigh all of the pros and cons carefully. But if you're struggling to make your student loan payments, a REPAYE plan may be worth considering.
Pay as You Earn Repayment Plan
If you're struggling to pay your student loans, there are several repayment plans that can help make your payments more manageable. One option is the Pay As You Earn Repayment Plan, which is available to borrowers who have a partial financial hardship. Under this plan, your monthly payment is capped at 10% of your discretionary income, and any remaining balance is forgiven after 20 years of payments. Another option is the Income-Based Repayment Plan, which is available to all borrowers regardless of financial hardship. Under this plan, your monthly payment is capped at 15% of your discretionary income, and any remaining balance is forgiven after 25 years of payments. There are also several other repayment plans available, so be sure to explore all of your options before making a decision. Whichever plan you choose, remember that making timely payments is essential to maintaining good credit and avoiding default.
