As you try to navigate the arduous process of repaying your student loans, you can benefit from considering your loan options. A couple of viable options are student loan deferment and student loan forgiveness. If you’re looking into these options then you’re likely trying to learn how to pay off high student loans. The higher your debt is then the more options you will want to explore to help it not continue to burden you financially.
Student Loan Deferment
Deferring your student loans means either temporarily stopping your repayments or reducing the amount to be paid for up to three years. Here’s what you can expect to happen if you decide to defer your student loans:
You will not be expected to make any repayments. However, you may do so if you want to.
You will have interest on your unsubsidized student loans, which will accumulate until the end of your deferment period.
How do you become eligible for Student Loan Deferments?
You are entitled to a student loan deferment for up to six months after graduation if you are enrolled in a school at least half time. However, if you are not in school, you can defer your loans for a maximum of three years. You can also avail student loan deferments in the following cases:
If you are serving in the military in a war-related aspect or a national emergency. You may avail this for thirteen months after service, which means the three-year limit does not apply to this situation.
If you are unable to secure a job
If you are serving in the peace corps
If you are undergoing treatment for cancer or have finished the necessary treatment sometime within the last six months
If you are suffering financial hardships, you may be able to get a student loan deferment.
Aside from the conditions above, you need to make sure you go for the deferment of available federal loans. Examples of this include PLUS loans, Stafford loans, Perkins loans, and direct loans. Keep in mind that different private lenders may have different plans to defer loans. Also, make sure that you use a deferred payment loan calculator to determine how a deferred payment affects your loan.
What should you take into account before Deferring your Student Loans?
Here are some factors that you ought to consider before deciding to opt for student loan deferment:
Firstly, you need to keep in mind that student loan deferments can be useful if you have a subsidized loan as interest on this loan will not accrue during the period of deferment.
Secondly, you should check if there are ways for you to make reduced payments. If this is the case, you could greatly benefit from an Income-Based Repayment (IBR) plan. However, if you seem to have no cards left to play and are looking for an excellent short-term solution, student loan deferment is the way to go.
Finally, you ought to know that student loan deferments work well as a short-term solution if you have a temporary financial setback that you can fix soon. However, if you do not see yourself being able to make your repayments in the foreseeable future, you are better off without a student loan deferment.
Student Loan Forgiveness
While student loan deferments may not be the ideal option for everybody, you should know that there are many other options for you to choose from. One of the more popular ones is Student Loan Forgiveness.
Qualifying for Student Loan Forgiveness
There are a bunch of ways to qualify for a student loan forgiveness program. Here are a couple
Serve in the Military
Serving in the military can help you get your student loans forgiven. Each branch of the military has a student loan repayment scheme. The loan amount that you can have forgiven generally depends on your rank.
Becoming A Teacher
If you are a teacher, you can make use of the student loan forgiveness program for teachers. This program gets up to $17,500 from your loan forgiven if you are able to complete five continuous years as an educator at a low-income school.
Student Loan Forgiveness Programs
Here are a few student loan forgiveness programs you ought to know about:
Perkins Loan Cancellation and Discharge
You can avail this loan forgiveness program if you have Federal Perkins loans. Depending on your current employment status, you can get a specific portion of your loan amount forgiven, or get the whole loan amount forgiven under the right circumstances.
Loan Forgiveness Due to Death
This loan forgiveness program applies to Direct loans, Perkins loans, and a few others. If the borrower dies, the federal student loan gets discharged. The same thing applies if a student happens to have borrowed a Parent Loan for Undergraduate Students (PLUS) loan on behalf of the parent or guardian.
Public Service Loan Forgiveness Program
The Public Service Loan Forgiveness (PSLF) program is one of the most commonly used student loan forgiveness programs. This program helps students who struggle with their finances and are unable to repay their loan amount. This loan forgiveness program is a Federal program that caters to students who involve themselves in the public sector.
If you are working in education, the military, nursing, government administration, and so forth, this program is for you. You can use a Public Service Loan Forgiveness calculator to check how much of your federal student loans can be forgiven.
There you have it – a quick guide you can use to navigate the world of student loans and the various options that come with handling them.