Get Rid of It All. Student Debt, We Mean
If struggling to repay your student loans, there are different repayment / forgiveness plans that enable keeping your loans current without financial distress. Consider all options before choosing the best plan available.
Federal student loan forgiveness
The much-awaited federal education loan forgiveness plan announced by President Biden is eligible for all eligible federal student loans and FFEL loans in default. Singular borrowers who earn lesser than $125,000 annually and married borrowers filing jointly and earning less than $250,000 annually, will qualify for up to $10,000 in clemency. Pell Grant receivers qualify for up to $20,000. Some borrowers receive automatic forgiveness, while all other borrowers need to apply by Dec. 31, 2023.
Payment refund/ Income-driven repayment plan
Borrowers who have made federal student loan re-payments during their student loan forbearance period (from March 13, 2020 onwards) could be eligible to get a refund on those payments. Those qualified for a refund havd to get in touch with their student loan servicer, to get a refund on repayments made during the payment pause. If struggling to repay student loans, combine all federal loans into an income-driven repayment plan, with different repayment options. Monthly payments depend on discretionary income and family size. After 20/ 25 years, depending on the plan, remaining loan balance is forgiven. Financial data is updated annually for payments to reflect latest financial situation.
Public Service Loan Forgiveness (PSLF)
Public Service Loan Forgiveness is available for federal student loan borrowers opting for a public service career. After a decade of income-driven repayment plan and working for an eligible employer, all remaining debt is forgiven. The Biden administration announced major changes to the Public Service Loan Forgiveness program that expired on Oct. 31, 2022. These temporary changes make it easier to apply for forgiveness, so do enroll if eligible.
Debt snowball or avalanche
With a mix of private and federal student loans or different loans, a different approach is advised. Debt elimination plans, like debt snowball or debt avalanche, may chip away your student loan debt faster. In these debt elimination methods, list out each debt, including total amount owed, your monthly payment, interest rate and due dates. Next, make minimum payments on all loans. Here the strategy differs. For the snowball method, repay debt with spare funds, towards the lowest balance. For the debt avalanche method, repay the debt with the highest interest rate.
Refinancing and Student loan settlement
Consider refinancing of private loans by taking a new loan to repay all bundled student loans, secure new repayment terms and interest rates besides a single monthly loan payment until it’s repaid in full. Refinancing federal loans involves losing certain benefits, like forgiveness, forbearance, or option to enrol in income-driven repayment plans. Student loan settlement enables settling student loans for less than amounts owed. If lagging behind on student loan repayments and credit scores have suffered, this option is beneficial. You need a lump-sum quantity to repay outstanding settled balance, and lenders are not required to settle. Some lenders consider settling for less if a significant amount of unpaid debt is repaid.
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