Of all of the bills I have to pay each month, there is one that I dislike much more than any other. If you have begun repaying your student loans then I am sure that you can relate. Student loans are the bane of my existence. Who would have thought that the decisions of a young, and stupid, teenager would still be negatively impacting my life 20 years later?
Yep! I said 20 years.
While it is true that most federally funded student loans offer recent graduates a short grace period, you can actually defer repayment even further. With standard repayment terms typically extending for decades, it truly is conceivable that an individual may pay monthly payments for thirty years. If you are about to graduate, here are a few things that you will certainly want to know about repaying your student loans.
How Much Student Loan Debt Do You Actually Have
Once you graduate from college, you will start receiving correspondence from your lender. In this documentation, you should be able to determine exactly how much money you have borrowed in order to obtain your degree. You did get a degree, right?
In addition to knowing how much you owe, you need to determine the loan repayment schedule as well as if you are responsible for any additional items; such as accrued interest. If you borrowed money from Sallie Mae, you should be able to create an account in which you can track your student loan; monthly if you so desire.
Help! I Can’t Repay My Student Loans
Repaying Your Student Loans
Unlike other unsecured debt, student loan debt is virtually impossible to get rid of. Many people are, however, under the erroneous belief that they cannot file bankruptcy on student loans. The truth is that even though student loans are typically excluded from bankruptcy filings, you can get the included if you can prove that repaying your student loans places undue hardship on you, your family, or your dependents.
The trick is proving the undue hardship. Unless you are physically, or emotionally, unable to work your chances of having your student loan forgiven is slim at best. Additionally, you must also prove that if you were forced to repay your student loan, then you simply could not provide an adequate standard of living for yourself and your family. As such, it is generally best to explore other student loan repayment options.
When it comes to repaying your student loans, a borrower has three basic options (not included the aforementioned bankruptcy).
Deferring Student Loans
If you elect to defer your student loan, it simply means that you are putting off repayment for a specific amount of time. Generally lenders will allow you to defer your loan if you go back to school, become unemployed, become disabled, or join the military.
Student Loan Forbearance
In lieu of declaring bankruptcy, borrowers can also apply for a student loan forbearance. This simply means that you get a temporary reprieve from making payments. Many times lenders may also agree to accept a reduced amount for a set period of time.
Student Loan Forgiveness
According to an article found on yahoo.com, President Obama plans to cap student loan repayment terms at 10 percent of discretionary income. Furthermore, under this new proposal, any remaining unpaid student loan debt will be forgiven after 20 years.
While I fully intend to repay every penny I borrowed, I cannot help but wonder how many people will abuse the system and refuse to pay a loan that that entered knowing that they had no intention of ever repaying. It is inefficiency like this that has contributed to our current economic crisis.
Perhaps the best idea when it comes to repaying your student loan is to simply not borrow money in the first place.