The possibility for students to loan money from the state in order to pay for their education seems like a great idea. However, many students rack up such outstanding debt that this greatly affects their lives after graduating. Some of these students are repaying their debts for years. Among them, there is even a large number of citizens who are older than 40. What’s more, the cost of higher education is rising, and the cumulative student debt of citizens of the USA amounts to a staggering 1,3 trillion dollars! However, there are ways to deal with this situation. If you’re wondering how to handle student loans like a pro, then this article will help you out.
A grace period
First of all, there’s a grace period after graduating that usually lasts six months. During this period, you do not have to pay your monthly increments. In theory, this gives you enough time to get a job and then start paying off your loans. However, even during the grace period, the interest on your debt is calculated. That’s why it’s a good idea to start paying off your debt as soon as you graduate. However, it’s even better if you start saving while you’re still in college. If you don’t live in a dorm, you can, for example, save a lot of money by sharing an apartment with a roommate. However, living with someone is sometimes not easy, so be sure to check out these tips for living in a shared apartment for students.
Government programs will help you to handle student loans
If you haven’t managed to save enough money before graduating, there are other ways to handle student loans. One is them is to utilize one of the government programs that will help you with paying your debts. These programs usually modify the monthly sum of money that you pay according to your income. Usually, you will have to pay monthly increments that amount to 10 percent of your income. Then, there’s the option to pay only for the interest during the two- year period after graduating. If you go with this program, your monthly payments will be lower. However, after paying back the interest, you’ll still have to pay the original debt. It is precisely because of this that we can’t stress enough how important it is to try to pay back your debt as soon as possible (if you’re a student, it’s worth reading this article on how to save money).
A part of your debt could be forgiven!
Fortunately, there are ways to handle student loans by paying back the monthly increments and then applying for your debt to be forgiven! One such program will forgive your debt if you have been paying the government 10 percent of your monthly income for about 20 years. Another program, called the Federal Perkins Loans Cancellation and Discharge Program, will shrug off a portion of your debt for each year that you have been employed. However, this only applies if you have already worked for a full year. Otherwise, you will not be legible to participate in this program.
Still, you shouldn’t put all your hopes in these federal programs. Even if you did save a lot of money during college, these programs alone can hardly settle your debt. And as much as you’d like to enjoy your college years (when you’re not studying, of course), you should always have the amount that you have loaned in the back of your head. So, even if you do have enough money, consider not buying that fancy designer dress. Instead, buy a more low-profile (but equally cool) piece of clothing. Or, if you’re moving from one college to another, try to find the cheapest moving company there is (Verified Movers can help you with that).
Student debts can cause a great deal of stress
Unfortunately, costly student loans can cause a great deal of stress to after-graduates. This may cause some people to deal with their debt problem by simply ignoring it! Of course, you shouldn’t do that. Not only will the government sue you, but there’ll be more legal fees to pay, on top of your already ongoing student debt. Instead of that, think about how to handle student loans like a boss! To do that, you’ll need to stay mentally healthy and not let the stress get to you (while we’re at it, here are some ways to stay fit and healthy after college). Keep a clear head and work on your debt. Try to have faith that one day, everything will be okay and you’ll no longer have a debt to pay.
However, even if you have paid off your debt and things are now seemingly okay, you should still be aware of the fact that maybe now you’ll have another debt to pay. We’re talking about the taxes! If you have utilized one the federal program that help the citizens by forgiving a part of their debt, you should know that, while that portion of the debt is definitely forgiven, it is still thought of as income. Therefore, you still have to pay the tax for the portion of the debt that was forgiven.
How to save money
All of these things will definitely help you if you’re not sure how to handle student loans. However, as mentioned before, just saving as much money as possible during college will help you out a great deal! We have already mentioned some of the ways to save money, but here are some more:
- Eat at a college cafeteria, even if the food there is (much) worse than in your favorite restaurant. For now, you’ll save a lot of money. Later, there’ll be plenty of chances to eat better food after you’ve paid off your loan.
- Don’t go partying every day, but only treat yourself to a party every once in a while. We know that partying is a big part of college life. However, surviving in today’s harsh economy should be a bigger priority for you!
- It is tempting to call a taxi every time you’re going somewhere. However, a great way to save money is to walk whenever you’re going to a place that is relatively near.
- Get the cheapest moving company if you’re switching colleges (say you’re thinking about moving from CA to another state with some assistance – Verified Movers will help you find the right assistance).
- Instead of buying new books, maybe you can find cheap used books or simply borrow them from a friend. Wait for your friends to pass a certain exam while you’re studying for another course, and then borrow their books!
Having a plan and sticking to will certainly get you out of the debt eventually
Of course, saving money during college can be tough. However, to recapitulate, federal programs that allow you to pay back your debt on a monthly basis, that is calculated according to your income, can definitely be very helpful. And if you’re paying off your student loans on time, there’s a good chance that a portion of your debt will be forgiven. So, whatever you do – don’t despair. With some good planning, you can learn how to handle student loans. We have faith that one day (hopefully sooner rather than later) you’ll certainly clear your debt to the state.