Lucrative career options in the digital age are encouraging aspiring millennials to take a leap towards learning new skills and enhancing the current ones. Contemporary programs and courses devise their syllabus revolving around state-of-the-art industry-requirements and provide students with the doorway to professional freedom and all-round development.
Advanced career programs call for a significant amount of fees and, most often, taking a student loan becomes mandatory. Student loans have become very common and surprisingly, can amount to substantial amounts of debt. This can force you to procrastinate bigger dreams like owning a home, getting married and saving for retirement. Student loans can hold you back from living independently the way you love and reconsider your passion and interests.
Success in the modern world often requires you to take calculated risks, whether it’s about your career, starting a business and other aspects of life. Taking control of student loans from the start is a very important part of your financial plans & goals.Be in charge of your finances and concentrate on other important aspects of your personal and professional domain.
Here are some of the most effective methods to tackle student debts and finetune your finances.
Consolidate your loans and choose effective refinancing options
The Great Recession saw banks hesitant to assist students looking to refinances their existing loans. The economy slumped big time and banks rejected to offer student loans. However, colleges were beginning to swarm with students and a serious thought was applied to look for alternate refinancing methods. Banks suddenly re-entered the refinancing market to offer students better loan offers. This gives students the opportunity to save more by consolidating their federal and private loan into a single one. This way, they will be charged the lowest interest rate.
Private refinancing is available only for a niche group. You should not be employed in the public sector and should be out of a federal debt relief program. Otherwise, you cannot enjoy the benefits of refinancing.Make sure you don’t have any bad credits where you have to pay very interest rates.
Check out uncle Sam’s program that helps you consolidate your loan into a single payment process. It carries a lower interest rate and, the same is applied to prior loans. It allows you to pay less every month with an extended duration. In some cases like income-based repayment programs, consolidating your loans is mandatory.
Choose debt-relief programs
The Federal Government offers a breather for those whose monthly loan payments are higher than their income. The debt-relief program takes a chunk of the loan off the individual’s back. Manage your debts with an income-driven repayment plan where monthly payments include a certain percentage of your income. Payments often extend up to 25 years to lower monthly payments significantly. This includes four options to choose from, like:
- Revised Pay as You Earn program that limits the payments at 10% of your discretionary income with a repayment period up to 20 years
- Pay as You Earn offers the payment of 10% of your income with 25 years in hand to repay
- Income-Based Repayment plan gives 20 years’ time period to repay at just 10% of your income
- Income-Contingent Repayment plan gives the option to pay either 20% of your discretionary income or the amount calculated on a fixed repayment plan for 12 years, whichever is lesser
All the four programs come with the added benefit of student loan forgiveness. This option is extended only after 20 or 25 years and you are no longer required to repay the remaining loan balance. However, this difference amount is not eligible for income on tax returns and it will be taxed.
Student loan forgiveness
There are certain cases where the Federal Government can wave off you student loan repayment. As pointed earlier, this is an occasional situation where you no longer need to repay your remaining loan amount, subject to conditions. There is the Public Service Loan Forgiveness Program that qualifies individuals working in public service jobs, for loan forgiveness. They should be working full-time and should have made 120 payments.
Teachers working full-time for a period of five years for lower income in elementary or secondary schools enjoy a wavier up to $17,500. This includes subsidized and unsubsidized loans and is offered by the Teacher Loan Forgiveness Program.
Company benefits to repay student loans
Several companies have started offering student loan repayment as an employee benefit to relive graduates from the burden of repayment. Check out companies that offer this assistance where you also get an opportunity to showcase your skills and expertise. These benefits can also be tax-free in the near future.
Cut off student loan through digital methods
There are some lucrative digital platforms that allow a wavier on your student loan repayment and let you enjoy other benefits too. There is ChangED that automatically transfers your spare amount towards your student loan.
EvoShare offers cashback on every purchase made from its retail partners online. This cash back will automatically go into your student loan account when you connect to the app.
Pickpocket.me automatically transfers 10% from every dollar spent up to the first $500. However, this app costs you $4.99 per month.
Taking a student loan is inevitable these days and is the proven way to fund your higher educational programs. Before taking a student loan, it’s imperative you make a thorough study of the finer points and assess your abilities and repayment capacity. As long as you are in control of where and how much of your money is going to, you will be in favourable position to secure your future and lead a financially independent life.