5 Sources of Help if You’re Struggling With Student Loan Repayments

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Are you struggling with student loan repayments? If so, don’t worry. This article offers five valuable resources that can help ease your burden and get your finances back on track.

Help if You're Struggling With Student Loan Repayments

Federal Income-Driven Repayment (Idr) Plans

One of the best options to consider if you’re having difficulty repaying your federal student loans is applying for an income-driven repayment (IDR) plan. These plans are designed to make loan payments more manageable by adjusting them according to your discretionary income and family size.

There are four primary IDR plans available:

1. Pay as You Earn (Paye)

This program typically caps monthly payments at around 10% of your discretionary income and has a maximum repayment period of up to 20 years. To qualify, you must have taken out the loan after October 1, 2007, and be experiencing partial financial hardship.

2. Revised Pay as You Earn (Repaye)

Similar to PAYE in terms of payment calculation, REPAYE extends the maximum repayment period to up to 25 years for borrowers with graduate or professional level loans. A key distinction between PAYE and REPAYE is that there’s no eligibility cutoff date for when the loan was obtained.

3. Income-Based Repayment (Ibr)

Available regardless of when you took out your loan, IBR sets monthly repayments capped at either 10% or 15% based on whether it was issued before or after July 1, 2014. The repayment period lasts for a maximum of either 20 or 25 years depending on the issue date.

4. Income-Contingent Repayment (Icr)

ICR is another option you can turn to regardless of when your loan was disbursed. Under this program, repayments are calculated as the lesser amount between what would be due under a fixed repayment plan over twelve years or up to an income-adjusted amount that doesn’t exceed over 20% of your discretionary income. This plan offers a maximum repayment term of up to 25 years.

Applying for IDR plans requires contacting your loan servicer and completing relevant documentation such as financial information including current income, family size, adjusted gross income (AGI), among other factors considered in determining eligibility.

Refinancing Your Student Loans

To potentially lower interest rates or simplify repayment terms, consider refinancing your loans through a private lender. To get started in this process, research reputable companies such as SoFi or Laurel Road since they offer the option to get a student loan refinance seamlessly.

Just keep in mind that by refinancing federal loans into a private one, you may lose access to certain benefits offered by the government like IDR plan eligibility.

Forgiveness Programs

Student loan forgiveness programs can provide substantial financial relief if you qualify. For example, Public Service Loan Forgiveness (PSLF) forgives the remaining loan balance for borrowers in public service jobs after they made 120 qualifying monthly payments under a qualified repayment plan.

Additionally, teacher and nurse loan forgiveness programs offer assistance to individuals working in these professions.

Deferment or Forbearance

If you’re experiencing temporary hardship, look into deferment or forbearance options for your loans. Both of these measures temporarily pause or reduce your monthly loan payments to help with immediate financial challenges.

However, remember that interest may still accrue during these periods, so be sure only to use them as short-term solutions.

Financial Counseling and Budgeting

Sometimes professional guidance is essential in overcoming repayment struggles. Research nonprofit credit counseling agencies that specialize in student debt management and budgeting advice. Receiving expert help can not only facilitate better decision-making but also direct you towards available resources most suitable for your situation.

With several avenues available to support borrowers struggling with their student loan repayments – from income-driven plans to refinancing – take the time now to explore which option best suits your needs!

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