How To Get Rid Of Student Loan Debt

If you are a college student, then statistics say you may be in the half of all students that have taken out some kind of financial aid loan.  And if that’s true, then you are probably also wondering how to get rid of student loan debt as quickly and easily as possible.

The two main ways to handle student loan debt are: Reduce the principal balance of the loan, and taking advantage of loan forgiveness programs that you may qualify for.  Handling your student loans is a very large part of reducing your overall debt and you should know that when you have the facts, everything is a little easier.  Don’t let it snowball on you!

Tips For Reducing and Consolidating Student Loan Debt

1.       Investigate Payment Options – If making that payment on time is a problem, then you need to look at different payment options that are available.  Make an appointment and talk to your loan provider or financial aid rep at school and see if there is a way they can help you adjust the payment to fit your income.  This can include refinancing or consolidating your loans.  Be sure you ask lots of questions so that you can decide on a lower interest rate or extending the life of the loan.

2.       Understand Consolidation – The majority of loans are eligible for consolidation only when you are not longer actively enrolled in school, if the loan is in the grace period or if the loans meet a minimum balance requirement.  You need to find out if consolidation is a possibility and what the terms will be.  This can save you a lot of money right now and make payments easier, as you will only make one payment instead of several.

3.       Consider Loan Serialization – Although not common, loan serialization is a viable solution for those who do not want to consolidate and/or are not eligible for a loan forgiveness program.  Loan serialization is when a lender basically purchases the loans from your lenders and then “Stacks” the payments – which allow you to repay the loans one at a time.  This effectively lowers your monthly payment, but extends the total repayment period while keeping the variable interest rate of each loan.  Be aware that some loans as well as federal loans are not eligible for serialization.

4.       Loan Forgiveness, Deferment and Forbearance Programs – If you just cannot make your student loan payments at all, then you will need to look into a Forgiveness Program.  These programs allow you to cancel out a portion (or sometimes all) of the loan in exchange for a specific time you will provide a service.  There are several organizations that will take your service and then pay part of your loan for you.  These usually include military service, volunteering, teaching, or providing health care and legal aid in differing communities.  You can find out about these opportunities in your field by talking to your school or employer.

Loan deferment will postpone the repayment of your loan with the interest paid by the federal government (if the loan is subsidized) or added onto the overall balance (if it is unsubsidized).

Loan forbearance will allow you to not make payments or to lower your payments and takes extenuating circumstances into consideration.  Circumstances would include poor health or unforeseen personal issues.  Forbearance can be requested on the principal balance, the interest or for both.  If you would like more information on this, you can visit the federal student aid website.