It can be a struggle to paying down thousands of dollars worth of student loan debt, let alone straight out of college. With all things considered, including the slump in the job market and entry-level wages, you may be wondering how to make ends meet. One thing’s for sure, you don’t want to neglect your obligations or your credit score will suffer which could come back to haunt you later.
Luckily, there are a number of student loan payment alternatives you may qualify for if you're finding yourself unable to keep up with your debt.
Extended Repayment Period
When you graduate you are automatically put on a standard 10-year repayment plan unless you specify otherwise, but you can elect to change the loan term to a 25 year period. If you have a steady income, but feel overwhelmed by student loan payments, consider requesting an extended repayment period, which reduces your monthly payments. That being said, it will cause you to pay more interest over the life of the loan, however, it’s a viable option if it allows you to make payments towards your debt.
Income-Based Repayment Option
Many entry-level positions come with a low salary to match, making it hard to keep up with a $400 student loan payment on top of all your other obligations. Consider applying for an income-based repayment plan. Under this type of program, your student loan payments correlate with your income and can be significantly more affordable. Plus, if you make all payments on time each month the remainder of your debt is forgiven after 25 years.
Loan deferment, or putting off payment, requires you to meet certain circumstances including attending graduate school, earning a low income, economic hardship, unable to find a job or enlisting in the military. If you fit any of these criteria, you can request loan deferment, during which you are not required to make payments and your credit score will not suffer.
When you feel overwhelmed by your student loan debt it's important to remember that you always have options. Contact your lender and discuss how you can reach an agreement you can afford.