Paying Off Student Loans
At Watters Financial
Services, one topic that comes up often in client communication is student loan
debt. We see many clients struggling to pay off their personal student loan debt
or
their children’s debt. There are many choices for repaying student
loans. This checklist provided by DST Systems, Inc. can
help you weigh them.
Actively
managing your debt is an important step, and your student debt may be one of
the biggest financial obligations you have. There are many strategies that
could help you manage student loans efficiently. Here is a checklist.
- Choose
a federal loan repayment plan that fits your circumstances:
o
The
Standard Repayment Plan requires a fixed payment of at least $50 per month and
is offered for terms up to 10 years. Borrowers are likely to pay less interest
for this repayment plan than for others.
o
The
Graduated Repayment Plan starts with a reduced payment that is fixed for a set
period, and then is increased on a predetermined schedule. Compared to the
standard plan, a borrower is likely to end up paying more in interest over the
life of the loan.
- The Extended Repayment Plan allows loans to be repaid
over a period of up to 25 years. Payments may be fixed or graduated. In
both cases, payments will be lower than the comparable 10-year programs,
but total costs could be higher. This program is complex and has specific
eligibility requirements. See the Extended Repayment Plan page on the U.S.
Department of Education website for details.
- The Income-Based Repayment Plan (IBR), the
Pay as You Earn Repayment Plan, the Income-Contingent Repayment Plan
(ICR) and the Income-Sensitive Repayment Plan offer different
combinations of payment deferral and debt forgiveness based on your
income and other factors. You may be asked to document financial hardship
and meet other eligibility requirements. See the U.S. Department of
Education's pages on income-driven repayment plans and income-sensitive repayment plans for more
information.
- Take an
inventory of your debt.
How much do you owe on bank and store credit cards? On your home mortgage
and home equity credit lines? On car loans? Any other loans? Consider
paying extra each month to reduce the loans with the highest interest
rates first, followed by those with the largest balances.
- Free up
resources by cutting costs.
Consider eating out less, reducing snacks on the go, and carpooling or
using mass transit instead of driving to work. You may also be able to cut
your housing costs, put off vacations and reduce clothing purchases.
- Think
about enhancing your income.
A second job? A part-time business opportunity?
·
Consider
jobs that offer opportunities for subsidies or debt forgiveness.
- Federal civil service employees may be eligible for up
to $10,000 a year for paying back federal student loans. See the U.S.
Office of Personnel Management's Student Loan Repayment Program for more
information.
- Nurses working in underserved areas may be eligible
for loan assistance through the U.S. Department of Health and Human
Services' NURSE Corps Loan Repayment Program.
- Service members in the U.S. Armed Forces are eligible
for support. Check out the service-specific programs offered by the Air Force, the Army, the National Guard and the Navy.
- Teachers can consider programs such as Teach for America and the Teacher Loan Forgiveness Program.
- Sign up
for automatic loan payments.
Many loans offer discounted interest rates for setting up automatic
electronic payments on a predetermined schedule. A reduction of 0.25% per
year may look small, but over the life of a 20-year loan, it can reduce
your total interest cost by hundreds or even thousands of dollars.
- A last
resort is seeking loan deferment or forbearance. Students facing significant financial hardship may be
able to put off loan interest or principal payments. To see whether you
might qualify, look to the U.S. Department of
- Education's
information on Deferment and Forbearance.
Please call us if there is any way that we can help with this
topic. You can reach us at (201)843-0044.
Required Attribution
Because of the possibility of human or mechanical error by Wealth Management Systems Inc. or its sources, neither Wealth Management Systems Inc. nor its sources guarantees the accuracy, adequacy, completeness or availability of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. In no event shall Wealth Management Systems Inc. be liable for any indirect, special or consequential damages in connection with subscriber's or others' use of the content.
Because of the possibility of human or mechanical error by Wealth Management Systems Inc. or its sources, neither Wealth Management Systems Inc. nor its sources guarantees the accuracy, adequacy, completeness or availability of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. In no event shall Wealth Management Systems Inc. be liable for any indirect, special or consequential damages in connection with subscriber's or others' use of the content.
