Categories
Young Finances

The Ultimate Guide to Eliminate Your Student Loans, Without Paying!

Let’s be honest, paying back your student loans can be a stressful situation. At the end of the day it doesn’t matter how or for what reason you’ve accumulated your massive student loan debts, you just know that you have a student loan balance that remains which you are reluctant to pay, especially if you’re caught in the student loan hoax.

The Student Loan Hoax

As soon as you left undergraduate school, you should have quickly found that the entire system of accruing “good debt” (i.e. student loans) in order to pay for a college degree that would allow you to find your dream job was a giant hoax. And now you’re stuck. According to an article written for the Washington Post, “only 27% of college graduates have jobs relating to their major.”

After leaving college, it seemed as though your student loan payments sneaked up on you. And it seemed as though your student loan payments became due even before accepting the HR department’s low-paying offer in your first job that was in no way related to your degree…if you were even lucky to find employment. There was no way that you were prepared to begin paying off your student loans under the standard student loan repayment plan.

But, hopefully by this point in your career you’ve cracked the code of this hoax. At the expense of having a massive load of student loan debt you have now learned that the only guarantee that comes from earning a college degree is the transfer of a piece of bond paper, from the University to you, that represents the culmination of what you should have received while at college—only an education. Contrary to popular belief, the job that you were told would be on the other side of the graduation stage was not there.

Now you’re angry, with good reason.

Instead of following your high school dreams of landing the job you’d love in a career field you’d enjoy, you’re now working as a barista in the local coffee shop waiting until the economy gets better so someone can recognize your valued knowledge for which you paid tens of thousands of dollars to receive. Though, the truth of the matter is no one but yourself is going to rescue you from paying off your student loans. So why not tack action and do it, but with a twist. Hack your way out of your student loans!

How to Hack out of your Student Loans

Even though you are angry, for the most part, your student loans are here to stay. However, the good news is that you don’t have to struggle your entire life paying them. In fact, I suggest you retaliate and pay the least amount you can on your student loan debt until you are eligible to have them forgiven. Rise up and fight against the student loan hoax by hacking your way out of repaying the full amount of your student loans!

If the system allows for it, why not take advantage of it? There will be people who suggest you take the “moral high ground” by paying every cent that you borrowed but I challenge you to ask those folks, “are you going to pay my loans for me?” If their answer is no, you can immediately ignore any and all future suggestions from them.

STEP 1: Know what type of Loan(s) You Have

Before you can employ any of the tactics below, you must know which of your loans, if any, are eligible for a student loan hack. To find out, go over to the National Student Loan Data System (NSLD) website, which is the U.S. Department of Education’s central database for student aid.

This information is important to know because some of the following programs cannot be implemented if your student loans are not federally funded.

Private student loans you may have received are not federal loans and are not included in the NSLDS.

STEP 2: Get Your Student Loan Payments Manageable and as Low As Possible

Deferment or Forbearance

If you’re having trouble seeking employment, consider Deferment or Forbearance. Or, if you have the opportunity to build a business while living with your parents or some friends, do it, since you’d be technically unemployed.

A deferment is a period during which repayment of the principal and interest of your loan is temporarily delayed. Depending on the type of loan you have, the federal government may pay the interest on your loan during this period.

If you can’t make your scheduled student loan payments, but don’t qualify for deferment, a forbearance may allow you to stop making payments or reduce your monthly payment for up to 12 months.

There is no sense of stressing out to find a job just so you can pay your student loans if you trying to create a business. While your student loans are in either deferment or forbearance, next consider changing your repayment plans even before your full student loan payments kick it.

Check out the Student Aid’s summary page on deferments and forbearance.

Change Your Repayment Plan

If your student loan debt is just “too damn high,” consider a student loan repayment plan that is other than the standard repayment plan. For example, if you have Direct Loans or Federal Family Education Loan (FFEL) Program Loans, you can possibly use an income-based repayment plan to lower your payments. Monthly payments are capped at 10% of monthly discretionary income. And after 25 years of reduced payments, the remaining balance on the loan is forgiven.

There are also payment plans such as:

Graduated Repayment Plan

Extended Repayment Plan

Pay as You Earn Repayment Plan

Income-Contingent Repayment Plan, or

Income Sensitive Repayment Plan.

Check out the Student Aid’s summary table of the different payment plans for your student loans.

Student Loan Consolidation

If you have multiple student loans that have different interest rates and you want one lower fixed payment, consider a student loan consolidation into a federal Direct Loan.

The advantage of a student loan consolidation into a federal Direct Loan is that you can possibly stretch out your payments for up to thirty years, which means that the amount of your monthly payments lowers and your take-home pay increases.

In order to take advantage of any possible student loan forgiveness programs, be sure to use either the Direct Consolidation Loans Website or the StudentLoans.gov website, depending on your applicability.

Check out the details and how to apply for a direct consolidation loan on the Student Aid website.

STEP 3: Get Your Student Loans cancelled, discharged, or forgiven after 10 Years by choosing the right career!

As long as you have Direct, FFEL Program, or Federal Perkins Loans, there are plenty of options that you can use to have your student loans forgiven.

You will likely not be eligible for some of the student loan discharge conditions, such as total and permanent disability, death, or bankruptcy, even though these cases discharges 100 percent, but that’s okay.

The money discharge is in your career choice!

Since you are already employed in a career that you likely do not like, consider switching to a career that will allow you to have your massive debts discharged, reduced, or forgiven.

For example, a full-time teacher for five consecutive years in a designated elementary or secondary school or education service agency servicing students from low-income families can have up to $17, 500 discharged.

Or, an eligible public service employee can have up to 100 percent of their balance forgiven after 120 eligible monthly payments (10 years).

What type of public service jobs will qualify a borrower for loan forgiveness?

You must be employed full time (annual average of 30 hours per week) by a public service organization, or must be serving in a full-time AmeriCorps or Peace Corps position.

Organizations that meet the definition of “public service organization” for purposes of the PSLF Program are listed below.

  1. A government organization (including a federal, state, local, or tribal organization, agency, or entity; a public child or family service agency; or a tribal college or university).
  2. A not-for-profit, tax-exempt organization under section 501(c) (3) of the Internal Revenue Code.
  3. A private, not-for-profit organization (that is not a labor union or a partisan political organization) that provides one or more of the following public services:
  • Emergency management
  • Military service
  • Public safety
  • Law enforcement
  • Public interest law services
  • Early childhood education (including licensed or regulated health care, Head Start, and state-funded pre-kindergarten)
  • Public service for individuals with disabilities and the elderly
  • Public health (including nurses, nurse practitioners, nurses in a clinical setting, and full-time professionals engaged in health care practitioner occupations and health care support occupations)
  • Public education
  • Public library services
  • School library or other school-based services

STEP 4: Choose a Career that has a Student Loan Pay Back Program

If you don’t want to stick around in a public service career for 10 years just to have your loans repaid, consider a career where you received your repayment award and then transition earlier.

Nurse:

The Nursing Education Loan Repayment Program, “helps alleviate the critical shortage of nurses by offering loan repayment assistance,” and offers loan assistance for nurses. However, you will be required to work at either a “health care facility with a critical shortage of nurses or at an eligible school of nursing in the case of nurse faculty.”

U.S. Military:

Most branches of the military have student loan repayment programs with the added benefit of receiving a very healthy unmatched pension, if after serving you required obligation you later determine you want to continue serving 20 years of active duty service.

The Navy’s Loan Repayment Program can provide you with up to $65,000 to use toward paying off qualifying loans. The Army, which includes the Army National Guard, also has a College Loan Repayment Program that provides up to $65,000 (Army) or $50,000 (National Guard) in assistance. Check with local recruiters to learn specifics for each branch of service.

Veterinarian:

Qualified applicants under The Department of Agriculture's Veterinary Medicine Loan Repayment Program may receive up to $75,000 in loan forgiveness -- $25,000 per year for up to three years.

Medical Worker:

The National Institutes of Health will repay up to $35,000 per year in loans for qualified clinical researchers, and many hospitals will help repay loans for doctors who agree to work in physical therapy, among other career tracks.

Other Government Employee:

The Securities and Exchange Commission, Department of Justice, Department of State, and plenty other government agencies have student loan repayment programs. Consider seeking employment with a government agency and receive up to $10,000 per year for each year that you work.

Conclusion

You should know what type of student loans you carry because only federal student loans are eligible for many of the previous listed programs. These programs may allow you to lower your student loan payments, consolidate your loans, or have a public service entity assist with your payback.

If you choose a public service career that you’d enjoy, such as the military, not only will you gain the satisfaction of serving the public, you’ll also have a decent salary, an opportunity for world-wide travel, and a healthy pension after twenty years of active duty service.

Instead of stressing over student loan payments, choose any of the methods above to hack your way out of paying the full amount. You don’t have to pay the tens of thousands of dollars that you’re worried about, find a way to take advantage of one of the programs above. You owe it to yourself to hack your way out of the student loan hoax.

Rise up and fight back! If you think this post would be beneficial to someone you know—perhaps someone you are tired of hearing complain about paying their student loan debts—be sure to share this post with them.

Originally posted 2015-04-27 10:00:11.

Categories
Budgeting & Saving

How to Pay off Student Loans without Going Broke

This post was inspired by a reader question:

"How can I pay off my student loans without going broke?"

Student loans these days are a part of most college students' vocabulary. Yes, there are some recent college graduates who didn't have to take out student loans when they chose a college, but that's pretty rare these days.

Before you sign that paper

Here are some tips for those of you who haven't gotten to college yet. You will be able to avoid the debt headache if you follow this one tip.

Work during college

You can work full time while you are in school.

Cons: Your grades may suffer a little.

You won't get to participate in the 'College Lifestyle'.

Pros: You will have the money to take that extravagant vacation.

You can start building an early retirement fund or save money to start a business.

You've Already Signed the Paper

Here are some ways to make that looming debt a little smaller if you have already taken out some loans.

Only Borrow What You Need

If you know your major and you decide to take out a loan, only borrow what you can expect to make in your first year. For example, the starting salary for a finance graduate is 47,500 according to PayScale.com. If you're a Finance major, your total student loans for all four years of college should be less than or equal to this.

Don't have a major?

DO NOT BORROW MONEY.

If you are not sure what you want to do when you graduate, chances are you will be in school a long time, changing majors and racking up a big bill. If you are not sure what you want to do, start working full-time. You'll at least find out what you don't want to do, and it will put you closer to deciding what you do want to do.

Cons: You may have to get a part-time job to fill in cash for extra activities

Pros: You will have a low payment once you graduate

Borrow for a Full-Time Load

If you decide to borrow as much as the government allows and maybe more, you should prepare as much as you can while in school by networking in your chosen field and applying for internships as early as sophomore year.

Cons: You will have a large debt payment once you graduate

Pros: You will get the advantage of the full 'College Lifestyle'.

You can work an unpaid internship to get the experience you need to pay your debts off once you graduate.

You've Already Graduated

So what if you've already graduated and now you have a humongous debt payment? You have a few options. First use a student loan calculator to figure out what you owe.

Forbearance

If you are not making enough income to cover your loan payments, contact your lender and request a forbearance. As long as they are government loans, there are a number of options available for you.

Payment Plans

There are several loan payment plans available for those of us with Federal student loans. You can select a variety of repayment plans. One depends on your income, one is a fixed payment and there is even one that has a gradually growing payment. If you borrowed from a private lender, check with them to see what plans they have. Private lenders make their own rules with regards to repayment.

Deferment

Hide! You can become a full-time student, again, and your lender should automatically get the notification from your school that you are a full-time student. This will increase your overall debt load, but you may gain some skills that will propel you into that full time job you need.

The Good News

There is a silver lining! Remember that the government loans that you have are locked in to a relatively low interest rate. If you pay them at 4% and you can make 7% with a dividend paying stock, then you are earning 3%. So don't let your student loan payments get you down. You used a form of debt that's called good debt. It's debt that leveraged you into a position to increase your earning power. Eventually you will pay it off. If you can't afford the payments right now, talk to your lender and explain your situation. They will do what they can to help.

Did you pay off your student loans already? Were you one of the few that didn't have to take out loans?

Make a Plan to Get Out of Debt Faster with ReadyForZero

Originally posted 2014-07-15 06:00:40.

Categories
Budgeting & Saving

My Experience with Sallie Mae

LaTisha: This is a reader's experience with Sallie Mae. The purpose of these stories is to help prevent others from making the same mistakes. If you have an experience that you would like to share anonymously please contact me.

Figuring Out How to Pay Tuition

My experience with Sallie Mae has been a rather interesting one. I originally began business with the company back in 1999 when I started college at a private school. Imagine the overwhelming feeling that both my parents and I had when we realized the steep tuition that would have to be paid for me to get a better education. The head of the financial aid department made it sound so simple to just sign up for a student loan and everything would be handled. Well just coming out of high school with zero credit under my wings, my only option was for my parents to be the co-signer for me.

For those who are not familiar with the meaning of a co-signer it’s basically joint signers of a loan agreement who pledge to meet the obligations of the debt in case of default. My parents were only thinking about the present and not how it would affect them in the future. I did not think about how this could negatively affect me also. I took out a private loan, and several federal loans. The day that we decide to sign that loan was the beginning of financial imprisonment with Sallie Mae.

Deferment versus Forbearance

I only attended that particular private school for one year and this set me back $16,000. I figured that I wouldn’t worry about it too much because by the time I finish college I would make payments on the loan and I would be okay. Each year while I was in school I put the loan in forbearance. Anyone who knows anything about loans will know that when you’re in school you are allowed an in-school deferment. I was uneducated when it came to loans so I was gradually wasting my forbearance time away for when I really would need it.

At the beginning of my third year in school, I became extremely ill with major health issues and had to put college on hold. Well, there went my plan of finishing school with a good job so that I could pay my loan. I just kept the loans in forbearance and when I had the money I would pay some money on the interest charges (which were adding up). Eventually, I was not financially able to make payments on the loans and my forbearance ran its course.

I began to receive the phone calls from Sallie Mae and although I explained my situation, they were not in the least bit interested. All Sallie Mae wanted to know is how and when I would be able to make a payment. Once they realized that they had very little chance of receiving much money from me, they began the phone calls and threatening letters to my mom. She tried to help as much as she could but with her small paycheck and her own financial obligations it became a stress factor. At this point, all I wanted to do was put this behind me.

Lessons Learned

As of today, I have graduated college and with the economic downfall I am working part-time, seeking full-time employment. My mom is now disabled and not working at all. This unfortunately does not excuse the loans from so many years ago. I talk with Sallie Mae about once a month and I hear the same thing each time. “You have used up all of your forbearance so you cannot place your private loan in forbearance.” The loans are now around $20,000 because of the interest adding up. I make a small payment of $50 each month to keep the loan from going into default. If I could go back to the day I started college in 1999, I would never have signed that private loan with Sallie Mae.

What to avoid when beginning your college journey………

  • Co-signers: the debt will not only follow you but the person who co-signs for you.
  • Private Student Loans: These loans have more restrictions and usually have higher interest rates.
  • High Interest Loans: Avoid loans altogether if possible. There are many scholarships and grants available if you do your research.

LaTisha: Readers, what are your thoughts on this situation? Have you encountered a similar situation? Any suggestions on possible alternatives?

Make a Plan to Get Out of Debt Faster with ReadyForZero

Originally posted 2014-02-18 10:00:42.