If you’re like most students, you leave college with two things: a degree and a $37,000-sized debt!
Indeed, student loans are the bane of a college education.
You’ll get a job, sure, but you’ll spend the next 10 or more years of your life paying off the loan. You might even struggle to make your repayments. It’s no wonder more than 1 million people default on their student loans every year.
But there’s good news.
In this article we’re sharing student loan settlement options you can use to stay on top of your debt. Read on!
Work Out a Suitable Repayment Plan with Your Lender
When you took out your student loan, you agreed on a repayment plan. This includes the interest rate charged on the loan, monthly installments, and loan term.
So you finish your course, get a job and start servicing the loan. Unfortunately, there are events that can affect your ability to continue repaying the loan. You could lose your job, for instance, or your employer can demote you, effectively lowering your salary.
Under such financial conditions, it’s easy to default on your student loans.
Instead of letting the interest pile up, approach your lender and work out a new repayment plan that suits your income. Federal student loans allow you to base your monthly repayment on a certain percentage of your disposable income (income after taxes and other deductions) instead of your outstanding loan balance.
If you default on a student loan, nothing stops your lender from handing over your account to a debt collection agency or taking other legal measures.
Nobody wants to be in such a situation. You could even fall into depression.
But if you’re unable to keep up with your repayments or you’re undergoing extreme financial hardship, you could file for bankruptcy.
Bear in mind this isn’t a light decision to make. A bankruptcy will stay on your credit score for years and severely damage your credit score. However, if it’s the only way out of your student debt, it’s worth pursuing.
Plus, it’s not that easy for a bankruptcy court to discharge your student loans. You need a good lawyer on your side to help convince the court that you meet the set threshold. Read more here to gain insight into how to declare bankruptcy on your student loans.
Make a Lump Sum Payment
Wait… is this even possible?
Well, making a lump sum payment to your lender still remains the most straightforward way to settle your student debt. But it’s also the rarest option.
Nonetheless, laying your hands on a boatload of cash is a possibility. You could receive a handsome inheritance or win a massive bonus at work. Heck, you could even score a lottery jackpot.
Student Loan Settlement: Know Your Options
Student loans are a necessary evil. They help so many people get a college education, but most borrowers experience difficulty paying up what they owe.
The good bit is if your loan is in default or you’re really struggling to make ends meet, there are various student loan settlement options available to you. Explore them and find one that works for you.
Good luck, and be sure to set smart financial goals this year.