Author’s Bio: The following article is by Sophie Kinsella, a Contributing Columnist for OVLG. She has completed her graduation in Finance and is currently working with an investment firm in California. She basically focuses on OVLG’s brand reputation and prepares oak view law group reviews and press releases.
The important detail that you should know about student loan debt is that these debts cannot disappear unless you pay them off to get out of your debt problems. The increasing number of defaults on the student loans and the recent reports reflect the aforementioned realities. It has been said by the U.S. Department of Education in September that nearly 8.9% of the student borrowers have defaulted in repaying the student loan and this figure seems to have increased by 7% in the year 2010. However, this cannot put an end to your financial problems. Although most of the college students are facing serious debt problems and are looking to take the help of professional experts in this matter, yet they are swapping their credit cards due to weak financial condition in the U.S.
While talking about different Federal student loans, the U.S. government has several repayment alternatives. You may find that the monthly payment on your repayment plan is high as per your present financial condition. In such a situation, you may stretch your loan repayment period and thus, lower the monthly payments. You may also opt for graduated payment which means you will pay less at the initial stage but will pay more in future. You will find some repayment plans that depend on your monthly income. Get help of such options and make it a point to repay your student loan at the earliest possible. However, if you need to pay off a student loan that is within your means and you can afford to make huge payments, you may do so in order to come out of debts relatively fast.
You need to know that the private student loans charge variable interest rate. Although you may find that the interest rates are low while taking out a student loan, the rate would not stay the same throughout the loan term period. The private student loans have less repayment options when compared with federal loans and, as such, you can pay off your debts sooner. Try to pay the minimum amount on Federal student loans so that you can allocate more money for private student loans. You may have taken out federal student loans and you find that you cannot afford the monthly payments on all of them. In such a situation, you can leverage your three repayment options which include income contingent repayment plan, income based repayment plan and income sensitive repayment plan.
The student loan debt sums to $920 billion which leaves behinds the entire credit card debt by $120 billion. This seems to be a big headwind for the young people who are planning to bring their finances in the right track. The high education costs and the tuition fees are not allowing the students to avoid such loans. Thus, even if you take out a student loan, make sure you keep yourself educated about the details of the loan so that you may be able to take the right decision while paying off your student loan.