Student Debt Management

MANAGING STUDENT DEBT

As college students nationwide head back to campus for the fall semester, this annual trek may remind you of your own collegiate adventures. Or, like many graduates, that monthly student loan bill is reminder enough. The average student loan debt in the United States has climbed to $29,400, and financial experts don’t expect that number to decrease anytime soon.

If you are struggling with student loan debt, you may feel that you will never have a hold on your financial well-being. Fortunately, being proactive about managing this debt can help you live comfortably. Here is everything that you need to know about that mounting pile of student loan debt.

Repayment Options

The good news is that the federal government has recognized the struggle that student loan debt has caused. There are several repayment options from which to choose when you are trying to manage student loan debt.

Graduated repayment involves a steady increase in the monthly amount that you pay over a period of 10 years. Extended repayment options allow you to stretch out your payments for a period of up to 25 years. Income-based repayment ensures that you do not put more than 15 percent of your income toward student loan payments.

Consolidation

There are benefits to consolidation, but this choice is not for everyone. You will reduce your student loan debt to one payment. This is beneficial if you struggle to remember to pay each individual loan.

Interest rates may also be lower when you consolidate your loan. However, be aware that some types of student loans are not eligible for consolidation. Private loans and PLUS loans are generally not eligible.

Keeping an Open Line of Communication

It is important to stay in contact with your lenders when you are having a hard time paying back your loan. The worst thing that you can do is ignore the problem. While you may enjoy the luxury of not making payments in the present, penalties, fees and the eventual transfer of your account to a collection agency will cause major problems in the future.

The best thing you can do when you know that minimum payments are not reasonable for your budget is to call your lender. Be sure to have information related to your income and expenses at hand to demonstrate the squeeze that student loan payments are causing when it comes to your budget. Negotiating lower payments is a much better option than letting your credit score be destroyed by non-payment.

Student loan debt is a crushing weight on the shoulders of millions of young Americans. Addressing the issue and talking with your lenders is the best way for you to pay down your debt while having enough left over to pay other bills.