Principles of Increase

Financial Wisdom for Financial Freedom

  • Get Out of Debt
    • Accelerate Debt Elimination eCourse
    • Budgeting
    • Debt Pay-Off Strategies
    • Smart Spending
  • Build Wealth
    • Financial Freedom Planning
    • Investing
  • Make Extra Money
    • Start a Blog
    • Freelance Writing
    • Side Hustling
    • Money Making for Moms
    • Making Money Online
  • Blogging & Business
    • Top Blogging & Branding Resources
    • Blogging Tools
    • Business Tools
  • Lifestyle & Family
    • Around the House
    • Home Schooling
    • Kids & Money
    • Travel
  • Podcast
  • Income Reports

The Best Way to Pay off Student Loans- Start with Knowing Your Options

January 28, 2016 By Aja McClanahan 1 Comment

Disclosure: this post may contain affiliate links. I may receive commissions for purchases made through links in this post.

According to an article by MarketWatch, the student loan debt in America is growing at a rate of $2,726 per second! Are you one of millions of American’s struggling with student loan debt? Student loan debt doesn’t have to be forever and it doesn’t have to kill you.

Find out the best way to pay off your student loans by being aware of all your options for repayment, forgiveness or discharge.

Income Driven Options

According to government sponsored site Studentaid.ed.gov,  there have been a number of federal programs instated to help people with student loan payments based on income.

  • Revised Pay As You Earn Repayment Plan (REPAYE Plan)- Generally 10 percent of your discretionary income.
  • Pay As You Earn Repayment Plan (PAYE Plan)- Generally 10 percent of your discretionary income, but never more than the 10-year Standard Repayment Plan amount
  • Income-Based Repayment Plan (IBR Plan)- Generally 10 percent of your discretionary income if you’re a new borrower on or after July 1, 2014, but never more than the 10-year Standard Repayment Plan amount. Generally 15 percent of your discretionary income if you’re not a new borrower on or after July 1, 2014, but never more than the 10-year Standard Repayment Plan amount
  • Income-Contingent Repayment Plan (ICR Plan)- The lesser of the following:
    • 20 percent of your discretionary income or
    • what you would pay on a repayment plan with a fixed payment over the course of 12 years, adjusted according to your income

To find out if you are eligible for any of these programs, check out the Federal Student Aid site here. These programs can provide temporary relief, but the forgiveness period can take 20-25 years! Keep reading for information on how to get out of student loan debt much faster.

Refinancing

Not to be confused with student loan consolidation. Refinancing takes your loans (some lenders will combine federal and private loans) and puts them in a single loan and endeavors to find a lower rate for you. Lenders like SoFi, estimate they save their borrowers up to $14,000 on average on student loans. Not bad…

Consolidation

There are two types of consolidation: Federal and private. As mentioned above, some lenders, (like SoFi) will take both your federal and private loans and package them up to provide you a lower rate. Then there is also the Federally sponsored consolidation which can lower your monthly payment, but will extend your loan time causing you to pay more interest and money overall. Again, this is a good option for temporary relief, but you want to be able to get out of debt as soon as possible, so use it as needed.

sofibanner

Statue of Limitation

This applies to private lenders and loans obtained directly from a private school. The statue of limitation will vary by state, so contact someone who can assure you this is the case for your loan and in your state. Check out bennerweinkauf.com/ to read more information on legal advice.

This limitation means that there is a timeline for which you can be sued by the lender for a loan in default. FYI: Should you opt out of repaying your Alma Mater, they may withhold documentation like transcripts or diplomas. This is done on an institution by institution basis, but it is a possibility. We were in this situation (owed a loan for which the the statue of limitation was in effect) but still paid. It was the right thing to do since the money was borrowed and the promissory note signed. That was our personal decision- to respect the agreement that was made.

Discharge

Getting a student loan discharged can be difficult in some situations, especially bankruptcy, but it is not totally impossible. According to IllioisLegalAdvocate.org there are only a few ways that your loans can be discharged:

  • Death of the borrower
  • Bankruptcy (in some cases)- must prove that loan repayment would cause “undue hardship on the debtor and the debtor’s dependents.”
  • Total and permanent disability
  • Closed School or False Certification Defense

Again this option is the least likely scenario and should be resorted to only if it’s an absolute necessity.

Find & Work a Debt Repayment Plan

At the end of the day, student loan debt is just another debt, albeit a debt that is really hard to get rid of passively. Some of the options mentioned above are good if you are in a pinch, but the reality of the matter is that you want out NOW! In the end, you’ll need to increase income with side hustles and decrease expenses very consciously. It never ceases to amaze me when people tell me how indebted they are, yet I know for a fact they live very lavishly. As I say, you can’t wish yourself out of debt! You’ve got to have an active plan. If you need a jumpstart, check out my free eBook, Get out of Debt Now and as an immediate follow-up, Dave Ramsey’s Total Money Makeover. As you educate yourself, budget, hustle and take action, you will be in the best position to get rid of student loan debt faster than ever!

Did I miss anything? Weigh in!
std_loan_PIN

 

 

More from my site

  • How I Make $225,000 a Year as a Freelance WriterHow I Make $225,000 a Year as a Freelance Writer
  • July 2017 Income ReportJuly 2017 Income Report
  • March 2016 Income ReportMarch 2016 Income Report
  • How to Get Your Kid Started in Acting and ModelingHow to Get Your Kid Started in Acting and Modeling
  • How to Make Money with Ebooks: Writing Kindle Book for $500 a Month in Passive IncomeHow to Make Money with Ebooks: Writing Kindle Book for $500 a Month in Passive Income
  • 10 Ways to Invest In Real Estate  With Bad Credit and No Money10 Ways to Invest In Real Estate With Bad Credit and No Money
Aja McClanahan
Aja McClanahan
Aja “A.J.” McClanahan is a writer, speaker and entrepreneur.

Filed Under: Get Out of Debt

« 10 Ways for Kids to Make Money Without a Job
POI 05: Student Loan Help with Jay S. Fleischman of the StudentLoanShow.com »

Comments

  1. Laurie says

    March 22, 2016 at 2:25 pm

    If you are having a lot of trouble paying your student loans or are behind, I would recommend speaking to an attorney to find out what your best options are. Thanks for sharing!

    Reply

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Image
Hi! I’m Aja, the founder of Principles of Increase. Our family dumped over $120,000 in debt back in 2013. I got so many questions about it, that I decided to start this site. Here, I talk about taking control of your money and how to live a better life in general. I’m glad you are here! More about me…

Free eBook

Get Out of Debt Now

Get Access to My Latest Audiobook for Free

Get Out of Debt Now
Popular Posts
Investing Apps for Beginners: Start Trading Stocks Today

Investing Apps for Beginners: Start Trading Stocks Today

19 Streams of Income You Can Launch Right Now

19 Streams of Income You Can Launch Right Now

Online Jobs for Moms Who Want Make Money From Home

Online Jobs for Moms Who Want Make Money From Home

Looking for Free Money? Check out Apps that Pay You Real Money to Use Them

Looking for Free Money? Check out Apps that Pay You Real Money to Use Them

What is My Liquid Net Worth and How do I Increase It?

What is My Liquid Net Worth and How do I Increase It?

Disclosure

Disclosure: Principles of Increase contains affiliate links and receives compensation for product reviews. Aja McClanahan is also a participant in the Amazon Services LLC Associates Program, an affiliate advertising program designed to provide a means for sites to earn advertising fees by advertising and linking to www.principlesofincrease.com.This website is for entertainment and informational purposes only. Seek a financial advisor for guidance pertaining to your specific money issues. To access our privacy policy, click here.

Get Updates!

Categories

Social

  • Facebook
  • Instagram
  • Pinterest
  • Twitter
  • YouTube

Privacy policy

Copyright © 2021 · Tasteful theme by Restored 316

Copyright © 2021 · Tasteful On Genesis Framework · WordPress · Log in