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How to Start Using the Right Student Loan Repayment Plan

Graduating college and entering the workforce is exciting, but not always easy – especially if you’re having trouble paying back your student loans. Although student loan forgiveness may eliminate up to $1 billion in debt, Public Loan Student Forgiveness (PLSF) won’t take full effect until 2017. In the meantime, college graduates are still struggling to pay off their outstanding loans.

Here are a few tips that can help you not only eliminate your debt, but get your financial future back on track:

1. Standard Repayment for Student Loans

If you can afford a standard repayment plan, this is a good option; however, many standard loan payment plans aren’t plausible for recent graduates. Standard repayment is less costly in the long run because you pay more money up front, which decreases your interest rates over the life of the loan. On the other hand, it isn’t easy to cultivate an early career and make high monthly payments. Because of this, standard repayment isn’t best for everyone.

2. Understanding “Graduated Repayment”

Graduated repayment plans allow you to start paying back your loans with small, manageable monthly payments. Over time, these payments increase. Like a standard repayment plan, you must pay off the loan with in ten years. Instead of maintain consistent payments though, the monthly cost of repaying your loan increases every two or three years. In theory, the cost of your loan should increase with your monthly income.

3. Should You Consolidate Your Student Loan?

If you’re struggling to make your monthly school loan payments, you may be able to consolidate them for a smaller monthly bill. Consolidation doesn’t eliminate the debt; it combines several debts and prolongs the time you have to pay them back. This can lower the amount you owe each month through lower interest rates. You may be a good candidate for loan consolidation if:

  • You’re monthly student loan payment is fairly high, but you don’t qualify for deferment.
  • You’re loan is in default and you want to qualify for a new one to continue your education.
  • You want to get a lower interest rate for your student loan.
  • You want to get an income-based repayment plan and not all of your loans are through the government.

Talk to a Qualified Bankruptcy Lawyer About Your Debt

In the past two decades, higher education expenses have increased by a startling 1,000%. If you’re struggling under unmanageable school debt, get in touch with a Southern California debt relief attorney at Wadhwani & Shanfeld today. We’re here to help you, so contact our office at your earliest convenience to schedule your first consultation free of charge.

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