Pursuing higher studies in the US can be expensive. Hence, students tend to take loans to find funds for their studies. Student loans are specially designed to help students who require funds for their studies. However, be it any type of loan, you’ll have to repay the borrowed money within a given period. Most students worry at this point when they have to pay off the loan.
In this article, we have compiled some tips that will help you plan the loan repayment. We’ll also explain student loan forgiveness and how to apply for the same.
How to Pay Off the Loans Fast
The duration of repayment time of the student loans varies based on your repayment plan and the types of loan you’ve opted for. There are several ways through which you can pay your loans quickly.
Given below are some tips that you can follow:
- Extra payments:Some student loans give you the option to make additional payments at any time. However, ensure to keep the extra money in your current account and keep the next month’s due date as decided.
- Opt for autopay: Enable the autopay option. Allow the bank or the loan servicer to deduct monthly reinstallments automatically from your account every month, and they may later offer a discount on the quarter rate. Hence, before applying for a loan, make sure you ask about the autopay option.
- Refinance:Refinancing is a good option if you have a job and good credit. Refinancing means you can choose a new term for your repayment that is usually shorter than your previous one and with a lower interest rate.
- Bi-weekly payments: You might also get the option for bi-weekly payments based on the bank and the type of loan you’ve taken. With this option, you can divide your EMI and pay money every two weeks rather than paying one full monthly payment. This way, you’ll be able to save an extra payment every year.
- Follow standard repayment plan:The tenure of the federal student loans is 10-years as per the federal government. Hence, when you are not able to follow any of the above tips, the best thing you can do is follow the standard repayment plan. This will give you enough time to find the money for the repayment.
What is Student Loan Forgiveness?
How can you get rid of the student loan you’ve borrowed for your studies? Is there an option for getting the loan waived off? These are some of the questions that most students have. Well, with the introduction of student loan forgiveness in the US, it is possible.
Student loan forgiveness releases you from the debt of repaying the federal student loan debt. However, forgiveness is only available for selected types of loans and the eligibility is limited to borrowers in the educational, public service, or military sectors.
What to Ask Before You Stop Repaying Loans?
It is essential to check how student loan forgiveness affects your loan amount before you stop paying the installments. Some of the questions you must ask include;
- How could forgiveness affect the remaining amount that had to be paid?– When you still have more than $10,000 in student loan debt, it is imperative to save money for repayments. This is because, even if you get forgiveness for $10,000, you might’ve to pay any remaining amount over that limit.
- What to do if you have a mix of private and federal loans? – Most private student loans are not covered in the student forgiveness program. Hence, it is important to find the money for repayment of private loans, even if your federal loan comes under the forgiveness criteria.
- Does your degree affect the chances of forgiveness? –If your loan is for any advanced degree, you might not get the forgiveness on your loan. Though the chances are low, if you have taken a federal loan, but not a private loan, you should still hold on to that, since private loans are never considered for forgiveness.
- What to do if the loans were in default before the COVID? – If your loans were in default before the pandemic, the government will allow you to re-enter the payments in good standing.
How to Apply for Student Loan Forgiveness?
The application process for student loan forgiveness varies based on the type of sector you are working in. Given below is a step-by-step loan forgiveness application for Public Service Loan Forgiveness (PSLF).
To apply for the PSLF forgiveness, you have to consolidate your Federal Family Education Loans or Perkins loans to Direct Consolidation Loan. The deadline for the same is Oct. 31, 2022. You cannot receive payment credits under this limited period if you consolidate after that. Once done, you must submit a PSLF form to your loan provider. Then you have to follow the below-given steps:
- You have to verify the types of loans in your Aid Summary.
- Then, complete step 1 of the Help Tool PSLF and check the eligible employments.
- If you are eligible, but your loan doesn’t come under Direct Loan, you can request a Direct Consolidation Loan as mentioned above.
- After that, you can submit the PSLF form using the PSLF Help Tool by the above-mentioned deadline.
A major point to note here is that student loan Forgiveness is not similar to forbearance. While the former eliminates your debt completely, the latter only postpones the payments for a certain period.
We hope this article gives you an overview of how to pay your student loans and what student loan forgiveness is. Now, you can check your eligibility for forgiveness and find possibilities to eliminate the debt.