Student debt in the United States has become a big problem in the recent past. According to a study published by the Federal Reserve Bank of New York, student debt among 25-year-olds increased from 27 percent in 2004 to 43 percent in 2012. In total, students owe lenders almost $1 trillion. Another study released by the Center for American Progress found that the cost of earning a college degree has increased by more than 1,000 percent over the past 30 years. So here are great tips to help you manage and pay off your student loans:
Get To Grips with What You Owe
When it comes to student debt, it is wise to understand what you owe. As such, start by making a list of all loans that you have taken to finance your education including interest rates. It is also advisable to note what type of loans you have – direct government, government backed, emergency loans, or private loans. If you have doubts, use the National Student Loan Data System, which has comprehensive information related to education loans.
Consider Signing up for Upromise
Upromise is a program that helps students to earn money and pay their loans. Go to the Upromise website, sign up, and provide your credit card details. Every time you use your credit cards to make purchases, some of the money will go towards paying off your student debt.
Explore Different Payment Plans
Whether you have a steady income or not, try to figure out the best payment plan because most lenders allow students to pay education loans using income-based plans. If you cannot afford to service your student emergency loans, do not shy from negotiating with your lender. For example, you can ask for a deferment of your emergency loans payments.
Negotiate with Your Parents and Move Back Home
While this might sound like a crazy idea, it can actually help you save some money that you can use to pay off your student debts.
Explore Loan Forgiveness
Most students, including some of those who graduate and get jobs immediately, have a hard time paying off their student debts. In fact, an analysis carried out by the Federal Reserve found that some students were spending as much as 25 percent of their salaries to pay off student debts. Organizations that offer some form of debt forgiveness include Volunteers in Service America (VISTA), Peace Corps, and AmeriCorps.
Figures published by the Center for American Progress show that 53 percent of freshmen take out student loans every year. To avoid drowning in student debt, understand what you owe and explore different payment options.
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