How Not To Crumble Under the Weight Of Student Loan Debt

student loan forbearance definition

There are 43 million people in the United States who owe federal student loan debt. Student loan debt is more often discussed as an issue that only affects millennials, but it is an issue that cuts across all age groups. Federal statistics show that about 7.8 million people age 50 and older owe a combined $291.9 billion in student loans. People from age 35 to 49 owe $548.4 billion. That group includes more than 14 million people. The Average student loan debt in the United State is extremely high, making it impossible not to crumble under the heavy weight of it.

What Is Student Loan Debt?

Student loan debt is money owed on a loan that was taken out to pay the expenses of school tuition. These loans are used to cover the portion of tuition that has not otherwise been paid with grants, assets, scholarships, or the help from a parent or guardian. The tricky thing with repaying student loans is the system expects students to get jobs right after college. But there are no guarantees of immediate employment after graduation. This unemployment rate leads to students drowning in the average student loan debt after graduation.

Tips To Deal With The Pressure Of Student Debt

Student loan debt statistics say that 61 percent of more than 1,000 student loan borrowers fear student loan debt and their worries are spiraling out of control. More than 70 percent that took part in the survey said they suffer from headaches due to the stress. Here are some tips to not fall into debt and depression:

Choose the Right Repayment Plan

Federal student loan programs offer a repayment plan that automatically enrolls all users in a standard 10-year plan, with your first payments due six months after you graduate. The government also offers six other repayment options that could be more suitable for your situation.

Put Your Payments on Automatic

Majority of lenders either cut rates or offer some kind of bonus if you set your payments to automatic. If you pay your student loan payments automatically on your repayment option, some lenders will reduce interest rates by 0.25 or 0.50 percent as an incentive.

Reduce Your Rate

If you have a steady career and your monthly paychecks total $1,000 or more than your total monthly debt, there’s a high chance you can refinance a high-interest student loan into a lower rate. This reduction will reduce your monthly costs.

Who Can Help With Paying Off Your Student Debt

Learn how to pay off your debt faster. Our repayment experts are online to answer your questions. Connect with a live person for reliable information and debt reduction advice. Get in touch with us now.

What You Should Know About Income-Based Student Loan Repayment

income based student loan replacement

Are you someone who is struggling with student loan repayments? If so, you are not alone.

The United States is currently undergoing a student loan debt crisis and experts say that nearly 40 percent of borrowers are likely to default on their loans by 2023. It’s amazing how easy someone can get so much money from the federal government while choosing to major in a subject that does not pay that much.

The Problem with Student Loan Repayment Schedule

Federal student loans generally have a standard repayment schedule, wherein you are supposed to repay the principal amount and the interest within a span of 10 years. The monthly payments are fixed and remain unchanged for the entirety of the repayment period.

Such a repayment schedule might not be a problem for you if you manage to secure a good job right after college and receive a substantial starting salary.

If, on the other hand, you do not have a stable job or a steady source of income or if you have substantial financial obligations (large family, high cost of living, personal debts, and so on), you might find it hard to cope with the repayment schedule.

If you find yourself in such a situation, an Income-Based Repayment (IBR) plan might be a good option for you.

 

 Repayment Plans

 

What Is IBR and How Does It Work?

IBR is a debt-relief program offered by the federal government for people who are unable to keep up with their student loan repayments.

It is one of the four Income-Driven Repayment (IDR) plans offered by the government – the other three being Pay As You Earn Repayment Plan (PAYE), Revised Pay As You Earn Repayment Plan (REPAYE), and Income-Contingent Repayment Plan (ICR).

Unlike a standard repayment plan, IBR does not have fixed monthly payments which remain unchanged throughout the repayment period. The monthly payment is determined based on your income and it can be adjusted based on your financial situation.

How Your Monthly Payment Is Calculated

It is important to understand the payment terms of the loan before you sign up for it.

If your loan was issued before July 1, 2014, your monthly payment is usually capped at 15 percent of your discretionary income.

You are required to make monthly payments for a period of 25 years, after which you can become eligible for loan forgiveness.

If your loan was issued on or after July 1, 2014, your monthly payment is usually capped at 10 percent of your discretionary income. You are required to make monthly payments for a period of 20 years, after which you can become eligible for loan forgiveness.

 

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Advantages of IBR

Advantages include:

  • The monthly payments are much lower compared to what you are likely to pay under the standard repayment plan.
  • Your monthly payments can be adjusted based on your financial situation. Depending on the terms of the loan, you can recertify your repayment plan and lower your monthly payments for a number of reasons including the birth of a child, getting demoted at work, getting treated for an illness or injury, or losing your job. In some cases, the monthly payment can be as low as $0.
  • You become eligible for forgiveness after 20 or 25 years, depending on when your loan was issued.

Disadvantages of IBR

Some disadvantages are:

  • Since the repayment period can be anywhere from 20 to 25 years, you are likely to pay more towards interest compared to a standard repayment plan.
  • The loan amount which is forgiven after the mandatory repayment period is taxable.

Is IBR the Right Choice for You?

IBR can be a good option for anyone who is struggling with student loan debt. It is, however, not the only option available for you.

There are several other ways in which you can tackle your debt and improve your financial situation. If you want to learn how you can pay off your debt faster, you should speak to us.

Get answers to your debt questions here. Our debt specialists are waiting to hear from you. Get in touch with us now.

How to Live with Debt and Maintain Your Mental Health

debt and mental health

 

Struggling with lots of debt and wondering how you’re going to pay it off – or even down – can keep you up at night. And if you’re not careful, it can take a toll on your health – both your mental and your physical health. Something has to change. If you’re wondering how to get out of debt, we have answers and can help you manage. If it makes you feel any better, you’re not alone. Total household debt in America (mortgages, student loans, car loans, credit card, and other debt) is at record levels. Americans seem to be obsessed with credit cards, on average carrying a credit card average of $6,354. Many are having trouble keeping up with payments. Where do you fall in that category? Are you in too much debt and worry about how you’re going to pay your bills?

 

credit card debt and mental health

 

Signs That You’re in Financial Trouble

Sometimes the signs that you need financial help are obvious. In case you’re wondering where you stand, here are some red flags that you’re in over your head and should consider getting help with managing your debt load:

  • You’re missing payments. You don’t pay every bill, every month. You’re selectively paying bills across the board. Creditors are constantly calling you.
  • You’ve maxed out on your credit cards and can no longer use them, and the minute you make a payment, the balance increases or interest and late fees are eating up any “wiggle” room.
  • You’re getting cash from your credit cards or getting cash advances, which come with high interest rates and major fees.
  • You’re paying ridiculous amounts of money each month, due to high interest rates, late fees, or fees to restore your phone service or utilities.
  • You’re constantly borrowing money from family or friends.

How to Get Out of Debt

If you’re doing any of the above, you’re in financial hot water.  If you’re wondering how to pay off debt fast, we have some suggestions and solutions. Here are some tips to get out of debt:

  • Track your spending – A great way to do that is with a  budgeting app, many of which are free of charge.
  • Get an extra job – Look for part-time jobs that pay well.  
  • Downsize your lifestyle – Eat out less, and when you do go to a restaurant, consider splitting a meal. The portions are pretty big.
  • Entertain the family at home instead of going out and paying for expensive movie tickets.  
  • Cut back on your visits to the hair/nail salon.
  • Buy with cash instead of credit cards – We tend to spend more money when using credit cards.
  • Talk to us about how to get rid of debt.

 

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We Can Help You Better Manage Your Debt

When you think about it, the majority of us will always have some type of debt. Believe it or not, you can live with debt and maintain your mental health. Call Your Consumer Services at 866-858-3384, and let us help you get started. The sooner, the better.  We can help you to stop worrying about your debt, so you can sleep more peacefully at night.

Can Student Loan Forbearance Help You?

 student loan forbearance

 

Student loans are a major issue in the United States. More and more, those leaving higher education find themselves saddled with huge amounts of debt which is difficult – if not impossible to repay on time. When it comes to student loans – or any loans for that matter – some of the terminology may seem alien in nature. Forbearance is one example of this strange language. But what is it, and can student loan forbearance help you?

What Is Student Loan Forbearance?

If you find yourself not being able to repay your student loan on time, there are options available, including forbearance. Put simply, forbearance is a type of financial protection offered by Federal Student Aid for those having difficulties making their scheduled payments on their federal student loans. Private lenders may also provide forbearance to those who are struggling to meet their repayment commitments, but these options vary based upon the lender and the terms of the loan agreement.

Forbearance on federal loans is available for both Direct Subsidized and Unsubsidized Loans. When you successfully have your federal student loans put into forbearance, you are able to postpone any monthly payments for a set period of time – usually up to 12 months. This allows you to escape the nightmarish possibility of your student loans defaulting, which can result in a whole host of unwanted issues, including taking a serious hit to your credit score, as well as the possibility of wage garnishments.

 

student loan forbearance definition

 

Determining If Forbearance of Student Loans Is right for You

Forbearance is a great way to give yourself some time to improve your financial situation or to make arrangements with your student loan provider to reduce your monthly student loan payments. Unfortunately, while your loans are in forbearance, the interest on your overall loan balance continues to accrue, meaning the total amount due will most likely increase – even though your monthly payments have stopped. Because of the accrual of interest, it is important that you consider every aspect of forbearance before you decide to apply.

Mandatory Forbearance

For those in particular situations, your loan service provider is required to approve your request for forbearance. These instances include:

  • Those serving in AmeriCorps.
  • Anyone completing a medical or dental internship or residency.
  • A member of the National Guard who does not meet the requirements for a military deferment.
  • Teachers who qualify for teacher loan forgiveness.
  • Those whose monthly payments have been a minimum of 20-percent of their gross income for three years.

 

mandatory forbearance student loan

 

Contact Engage IQ Today to Learn About Your Student Loan Repayment Options

If you’re looking for the best way to pay off student loan debt, Your Consumer Services can help you. We offer private student loan counseling through one-on-one chat. There is no upfront cost for clients. You can connect with a live person from a non-profit willing to provide you with further information on your student loan forbearance options. as well as reduce your debt or monthly payments. You can also email us. Our debt specialists are waiting to hear from you and can answer any questions you may have. So, if you’re ready to get a break from crippling monthly payments – let’s do this!