Even with different loan schemes which students can subscribe to such as the federal government or private student loan institutions, they are always faced with financial crises. This is usually due to increasing college fees which they have to clear every year. When they have exhausted financial aid from the federal government and from their own personal savings they are left with limited options. They resort to applying for private student loans. The private student loans usually charge higher interest rates than the loans offered by the federal government. Most private student loans charge interests of about 11-18% while the federal government charge as little as 4%. By using federal loans most of them do not usually need help in getting rid of student loans debt.
With the higher interest rates charged by private student loans, students incur a lot of payments when they finally graduate from college. It is estimated that more than 70% of students graduate from college with loans to repay. Defaulting loans have very dreadful consequences. When one defaults loan repayment, they become unable to rent an apartment or even acquire a mortgage as the lender will be on their neck all the time seeking settlement of the loan contract. Once they default, some students don’t know what to do to get rid of student loans, and this makes their life after college very tough.
Tips On How to Get Rid Of Student Loans
How can I get rid of my student loans? This is a common question among graduates from college. Immediately they graduate from college, many of them realize that the interests on the loans they had applied have heaped up. Two years after I had graduated from college I still had a lot of money to repay as part of the loan I had been offered. I didn’t have even the slightest idea on how to get rid of my student loans. This is a common challenge facing many students.
There are several ways on how to get private student loans. Much of the information available on the Internet or any other sources deals with acquiring the loans. However, little is known on how to get rid of private student loans once the student is overwhelmed in dealing with repayment plans. The following are tips on how you can get rid of private student loans:
- Interest only repayment – this is where the lender allows you as the borrower to only pay the interests incurred on borrowing a particular amount of money. In this way, the principal remains intact as you concentrate on paying the interests which are always calculated from the principal. In this way, the student is able to reduce the total amount required to fully settle the loan by only remaining with the principal as the only debt to settle while making interest payments. The interest is the only amount paid every period in which the interest is calculated which can be monthly depending on the loan contract. However, in most cases, the interests are always paid per month.
- Forbearance – the client postpones making the regular repayments without their account being declared defaulted. It might be in cases of emergency such as hospital emergency which may need some money to settle the bill. In this case, the client and the lender enter an agreement in which the lender allows the client to settle the emergency bill before embarking on the loan repayment. In forbearance, there is no delinquency even after postponing repayment plans.
- Refinancing – in such a case, the student with the loan debt burden can take another loan from a refinancing institution. The loan covers all or part of the current loans. The new loan from the refinance has a different repayment plan and interests rate. This gives every client some of the ample time to clear their current loan from the loan they have been offered by the financiers. These refinancers help pay private student loans. There are several refinancing institutions with different interest rates as follows:
Where to Find Private Student Loans Help
The federal laws governing loan repayment are always flexible than those of private student loans. For federal loans, they give a period of 9 months beyond which if you fail to pay the loan, your account is declared defaulted. Laws governing private student loans are a bit tougher. For them, failure to make even a single payment will definitely declare land your account to delinquency. This will automatically worsen your credit history. It will lead to lowering of your credit scores rendering you unable to acquire loans from other institutions. This is why talking to the lender becomes the best way to get rid of student loans. In most cases, the lenders are always willing to get to know the challenges you might be facing in repaying your loan. They would not want to lose their clients and to create good contact with them becomes easy. Through contacting them, you can convince them to allow you pay smaller amounts for a limited period of time before you start making large payments.
How to Eliminate Student Loans without Financial Pressure
When one defaults loan repayment, the lender conducts direct collection of the client’s properties in an attempt to settle the loan. In case the direct approach doesn’t work, the client resorts to External Collection Agency. This is where the lender submits the client’s details to the external agency to do the collections. Therefore, students should know how to get rid of school loans before they lose their properties to collection agencies. Eliminating student loans becomes easy when you choose a repayment plan that suits your ability. You can also qualify for student loan forgiveness plan which is initiated by the federal law such as Public Service Loan Forgiveness.