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Student Loans

Student Loans

Student loans, in the past couple years, have become more of a problem than ever before. The facts are simple: you can't get a job without college, and you can't pay for college without loans, and you can't afford the loans without a job. It's a vicious circle, and it is one that over 37 million college graduates in the U.S. are experiencing at the very moment. The poor U.S. economy has not only affected established business owners; it has just as strongly impacted the not-yet-established college graduates that ask for nothing but a salary large enough to make payments on their loans. Working at Burger King with a Bachelor's or Master's degree hanging on your bedroom wall in your parents' house is no longer something to joke about – it is real, and it is happening every day. Just about 20% of college graduates are either unemployed or underemployed.

In taking these statistics into consideration, it is no wonder why many college graduates are unable to pay back their loans. A large number of graduates have no other option but to take minimum wage and restaurant jobs. After their everyday expenses, their small check is gone, leaving no room to pay student loan payments. Even a $50 payment can mean the difference between having enough food to eat for a month or not. Since the average student loan amount is about $25,000, paying them off from a low-wage salary is nearly impossible. The good news is that if you have student loan debt, you are not alone. About 50% of college grads have some amount of student loan debt, so you can be assured that you are definitely not the only one. And you can be assured of one more thing: we are here to help.

Information about Student Debt

What is the government doing to help, you ask? Well, not much. There are, however, two primary resources offered to graduates who are having trouble paying off their loans. The first resource is repayment plan options, and the second is loan forgiveness opportunities. There is not just one option for paying off your student loans; there are, in fact, seven. They are as follows: standard repayment plan, graduated repayment plan, extended repayment plan, income-based repayment plan, pay-as-you-earn repayment plan, income-contingent repayment plan, and income-sensitive repayment plan. Let's find out which one works for you.

Repayment Plans

The standard repayment plan works with direct subsidized and unsubsidized loans, as well as all PLUS loans. With this plan, you will have to pay a fixed amount of at least $50 a month for up to 10 years in order to pay off your loan. You will pay less interest with this plan, compared to the others. Next, the graduated repayment plan works with the same loans that the standard does. The difference is, though, that the monthly payments vary: they are lower at first and then increase every year for up to 10 years. With this plan, you will end up paying more for your loan over time. The extended repayment plan again works with the same loans as the first two. With this, you will have a choice between fixed payments or graduated payments. Your monthly payments will be lower, but you will end up paying more in the end for your loan. There is also a restriction of at least $30,000 of debt to qualify for this plan.

One of the most common and beneficial plans is the income-based repayment plan. Direct subsidized and unsubsidized loans, PLUS loans and consolidation loans (direct or FFEL) are eligible for this payment plan. Your monthly payments for this plan will be a maximum of 15% of your discretionary income. This plan is beneficial because your payments change as your income changes, so not being able to make payments is not an issue. The payment period may, however, take up to 25 years, and you must prove that you have a partial financial hardship in order to qualify. The pay-as-you-earn repayment plan is similar to the income-based. The same loans work with this plan as with the income-based. Your monthly payments will be 10% of your discretionary income, and your payments change as your income changes. Like the income-based, it may take up to 25 years to pay off your debts, and it is very difficult to qualify for.

Next, the income-contingent repayment plan works with the same loans as the previous two. Your monthly payments will be calculated each year based on your adjusted gross income, family size, and total amount of debt. Finally, the income-sensitive repayment plan works with subsidized and unsubsidized Federal Stafford loans, FFEL PLUS loans and FFEL consolidation loans. Your monthly payment for this plan will be based on your annual income, and the formula for determining your monthly payment can vary.

Forgiveness Programs

The other help that some graduates receive from the government in regard to their student loans is the Public Service Loan Forgiveness Program. In this program, student loan borrowers may qualify for forgiveness of their remaining loan balance after a certain amount of years of making payments. The loans that are eligible for forgiveness are direct loans, including FFEL loans and Perkins loans. The repayment plans that qualify for forgiveness are the income-based repayment plan and the income-contingent repayment plan. Generally, those who qualify for loan forgiveness will be forgiven after 25 years if you have a private sector job, and 10 years if you have a public sector job.

It is in your benefit to look into these helpful government programs in order to get help with your student loans. Don't know where to begin? Well, we do! Get in touch with us about any questions you have about getting help with your student loans. We guarantee to provide you with the most helpful advice and information about student loan debt and how to get relief. You don't have to go through it alone − we are here to help!