The primary thing that scares students the most is the thought of not being able to clear off their student loan debt. This is a legitimate concern considering the soaring university costs and variable interest rates. Most students who end up in a financial pit tend to do so due to poor planning. However, with the internet and the vast amount of information you can look up on this subject, there is no reason to rush and make foolish decisions. There are a few ways to make student loan debt easier for you to carry. Two of those are student loan refinancing and student loan forgiveness.
Student Loan Refinancing
When you do student loan refinancing, you are essentially getting a new loan at a new interest rate. You are generally allowed to refinance both your federal and private student loans. Student loan refinancing involves getting rid of your previous loans and getting a new loan with new repayment terms, and hopefully, a more favorable interest rate.
How do you qualify for Student Loan Financing?
Understanding what you need to be eligible for student loan refinancing is paramount. Keep in mind that private lenders often have eligibility criteria that are difficult to meet. This is not the case with federal loans. You will need to choose a lender based on your goals, priorities, requirements, and overall gameplan.
Lenders usually need you to have an excellent credit score and documents that prove that you have a stable source of income to help refinance your student loan. If you find that you do not have a credit score or income level that is up to the mark, you can apply for student loan refinancing with a cosigner. However, this cosigner must have a solid credit score.
When should you refinance your loan?
Now that you know how you can qualify for student loan refinancing, here’s how you know if you should opt for student loan refinancing. Ask yourself the following questions:
Do you have private student loans?
Student loan refinancing is an excellent idea if you have private loans, especially seeing how private loans have variable interest rates.
Do you have Student Loans at soaring interest rates?
Student loans at soaring interest rates plague many a student’s chances of making timely repayments. Student loan refinancing is a viable option in such a situation.
Do you have an excellent credit score?
If you have managed to build an impeccable credit score and history, you undoubtedly have the edge over other borrowers in terms of getting a loan at a reasonable interest rate.
What should you keep in mind before opting for Student Loan Refinancing?
If you are considering opting for student loan refinancing, here are a few things you ought to be aware of before you take the plunge:
Income-Driven Repayment Plans
Income-Driven Repayment (IDR) plans are issued by the federal government. The purpose of an IDR plan is to allow borrowers to clear their loan repayments as efficiently as possible. The IDR plan considers your income power and develops a repayment plan accordingly.
The IDR plan makes for an excellent way to take a break from continuous repayments. However, higher interest rates are the price you will have to pay.
Forbearance is the choice to delay your loan repayments on the off-chance that you cannot make your payments every month. When your loans are in the forbearance period, they will accrue interest, which means that your loan balance will go up overall when you start to make your repayments once again. Forbearance is a useful solution for the short-term but is not a viable option in the long run. Ensure you do not use this option unless it is necessary.
The option of deferment enables you to stop your loan repayments or reduce the loan amount you have to pay, for a maximum of three years. During this time, your loans will not accrue interest because the government will take care of them. However, refinancing your student loans can strip you of all these federal protections.
Student Loan Forgiveness
Student loan forgiveness is another viable option that can release you from the clutches of loan repayment. You can either avoid repaying a part of the loan or the entire loan altogether, depending on your circumstances. However, not everyone qualifies for this.
Most people cannot qualify for student loan forgiveness. However, you can improve your chances of qualifying if you work in the public sector. If you are a police officer or an employee of government agencies and so forth, you stand a chance at availing the option of student loan forgiveness. There are a variety of student loan forgiveness programs with different eligibility criteria at your disposal. Here’s the most commonly used one:
Public Service Loan Forgiveness (PSLF)
The PSLF program is meant for employees of public service. You have the choice to get your loan balance forgiven after making 120 loan repayments should you qualify for this program. However, it is vital to bear in mind that you need to make these repayments under the income-driven repayment plan to make use of the PSLF program.
If you find yourself stuck with student loan debt, know that you have a multitude of options if you are looking for them. You do not have to limit yourself to student loan refinancing or student loan forgiveness programs. Consider entertaining some off-beat solutions like apps like Givling. Be sure to check out the Givling review to see if this is something that interests you.