College costs continue to increase every year. That might help explain why around 70% of recent graduates took out student loans to help cover the costs. According to Purefy, college graduates with over $100k in student debt aren’t uncommon, which is why you need to determine how to pay off your student debt, even if it seems impossible. Luckily, there are many repayment options available out there!
Of course, signing the student loan paperwork is one thing. Understanding the details of your student loan debt represents something else entirely.
Keep reading and we’ll give five key things you should know about student loans.
1. Bankruptcy Won’t Spare You
While some extreme life circumstances might let you offload student debt in bankruptcy, it’s the exception. Most courts won’t even consider student loan debt during bankruptcy.
Signing that student loan paperwork basically obligates you to pay off that debt one way or the other.
2. You Can Alter the Repayment Terms
If you took out all of your loans through Federal programs, you have some options to ease those student loans payment terms. A few of the options include:
- extended repayment plans
- income-based plans
- income-sensitive plans
These options can drastically reduce your monthly payments. For the income-based and income-sensitive plans, your payments reflect your most recent year of income.
Get a great new job, your payments go up. Lose a high-paying job, your payments go down.
3. Don’t Forget Your Co-Signers
Parents routinely co-sign student loans for kids. It’s a gesture that lets young adults secure funding for college. It also puts your parents on the hook financially.
If you decide that you don’t feel like paying those loans anymore, it’s not just on you. The banks will go looking for your parents to cover those monthly bills. If your parents put up their property as collateral — like their home — the bank can even repossess it.
4. You Can Reduce Your Loans with Scholarships
Most incoming college students spend a lot of time looking for scholarships and grants that can defray their college costs. For students in their second, third, or fourth year, don’t stop looking for those scholarships and grants.
Many scholarships specify that the recipient must be a junior or even a senior majoring in English Literature at a specific college. Take advantage of these scholarships if you can.
5. You Can Get Private Loans
If your parents make decent money, you can find yourself locked out of regular student loans based on the expected family contribution. That doesn’t always mean your family can afford to throw anything into your education fund.
For those situations, you can look into private student loans. These are loans that banks provide outside the standard student loans backed by the government. Don’t forget that different banks offer different terms for these loans.
Check out Commonbond vs Laurel Road for an example of how these loans differ.
Parting Thoughts on Things You Should Know About Student Loans
The terms of student loans can prove complex, but you can avoid some of the worst pitfalls. Only take out as much debt as you actually need. Explore all of your options for financing college.
When repayment time comes along, explore all of your repayment options. You can often reduce your monthly bill a lot with a different repayment plan.
Here we offer information and solutions for men and women living in the real world. Looking for more information on student loans? Check out our post on student loan consolidation.