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SLAY THE STUDENT LOAN DEBT GIANT By Janice Parker, Certified Consumer Credit Educator and Counselor

Janice ParkerStudent loans are a burden on many people in this country both young and old. Collectively, our borrowing for education is more than $1 trillion. Yes, I said TRILLION! Student loan debt also hinder many from reaching their financial and personal goals due to many factors including high debt to income ratios and defaulted student loan debt resulting in poor credit scores.

Thankfully, there are some ways you can decrease the amount of loans you have to take out and speed up the payoff of existing loans. Deferring your student loans won’t ding your credit score, but defaulting on your loans could have serious repercussions for you and your credit history. If you find yourself in a situation where you aren’t earning enough money to make your monthly student loan payments, it’s better to contact your lenders and ask for a deferment. But if you default on your loans, you may lose your right to defer payments. You also could become ineligible for future financial aid, which could really hurt you if you have plans to attend graduate school.

Before college

1) Educate yourself on the options of borrowing for education.

2) Start your degree out at a community college for two years before transferring to the four-year school where you ultimately plan to graduate. It’s great to say you or your child goes to some great Ivy League school, however if your budget doesn’t speak the same language you should consider other options.

3) Never take out more in loans for a four-year degree than you are likely to earn during the first year on the job that degree will get you.

4) Look for $10,000 four-year degrees. Many states have been deputized to deliver select standard four-year degrees for a total cost of $10,000. Degree offerings include information technology, business administration, organization leadership and more. Some states are even allowing its two-year community college to offer four-year degree. Do your homework before making your decision.

5) Consider work-study when available or resident assistant (RA’s). On-campus work can lower the cost of an education.

After you’re out of school

1) Research to see if you qualify for student loan forgiveness. Federal Stafford, Grad PLUS and consolidation loans in the Direct Loan program are eligible for forgiveness after 10 years of on-time payments. Private loans are not eligible.

2) Cap what you pay on federal student loans. Even if you don’t qualify for the PSLF program, there is still help for you under a variety of federal programs: REPAYE Plan, PAYE Plan, IBR Plan, and ICR Plan. Go to www.studedntaid.ed.gov for more information. Unfortunately, none of these programs applies to private student loans!

If you are out of school and none of the above options work for you because your student loan is now in default, you too have options! Federal student loan borrowers who are already in default can benefit from one of the biggest changes in decades to the federal student loan program: income based default rehab. With as little as $5 per month, borrowers will have the option to make nine payments to get out of student loan default in a 10-month period and have the default removed from their credit reports. Once these payments have been made, borrowers can request to be returned to repayment status and have a choice of regular repayment plans. (visit the website above to review your options)

This is great news for defaulted borrowers who could potentially get their wages garnished, miss out on government job opportunities, loose eligibility for new federal student loans to return for grad school, or lose professional licenses. All hope is not lost, but to slay this student loan debt giant, we must use wisdom, research our options and seek out help when necessary.

College access or the affordability of it was not attainable for many in our previous generations. The goal was just to get our loved ones there and often times by any means necessary including exhausting retirement funds, taking out second mortgages or signing for parent loans that we never understood the future consequences. Not only is it imperative to research your college funding options but it’s just as important to research the education/career in which you are paying for. Your education is an investment in which you should expect great returns!