Too much student debt? America’s students have accumulated over $1.5 trillion because of this problem.
But why do so many make this common mistake?
Student loans look like a good investment, no matter how expensive they are. After all, you’re investing in your income potential.
But it’s just that. Potential.
Most likely, you may remain as a low-earner while interest accumulates on your loans. Eventually, it grows so fast that it feels like you’ll never pay it back.
Debt issues are personal problems. But when so many borrowers owe money at such numbers. It becomes a national issue. If you can’t pay off your loans, there may be other solutions.
How To Get Rid Of Student Loans?
Student debt can really be a pain in the neck. It hits your credit score, so you can’t get proper help from other lenders. It reduces your saving ability, which stops you from buying a house, starting a business, or living the life you want.
It’s neither easy to pay back because it reduces your chances of landing a job. And if you do, the court may have already ordered garnishing your wages. So they’ll always deduct a fixed number of your paycheck or 25% of your income — whichever is greater.
Even if you wanted to declare bankruptcy, you’re still obligated to repay your student debt.
When you can’t pay back, it’s a common hope to qualify for debt forgiveness programs. But fewer people than you think actually get them written off.
But there are plans offering those options already:
- The Public Service Loan Forgiveness program. They forgive all your debt if you are employed by a government or not-for-profit organization. But if you don’t like that, you can change your job after getting your loan forgiven.
They also forgive the rest of your balance if you made, at least 120 payments while working for a qualifying employer. Learn more about those options here.
- Teacher Loan Forgiveness. You can cancel $17,500 from your direct or FFEL loan if you work as a teacher for five consecutive years in a low-income center (elementary school/ secondary school/ educational service agency).
Many exceptions apply to qualify for loan forgiveness. But for the average student, there’s no point in learning all of them unless you really think your debt situation is unfair.
Do Student Loans Ever Get Written Off?
You instantly qualify for loan forgiveness 20-25 years after getting the loan, depending on your school and grade.
If you turn 50 before that happens (very unlikely), you don’t need to wait 25 years. You instantly qualify for forgiveness as well.
Mind that your credit report will reflect debt until the last payment made in seven years.
This means student debt stays in your report for seven years minimum, even though you still need to pay it. BUT if you make a payment after those seven years, student loans will hit your credit score again.
So No, defaulting on your loan doesn’t ruin your life. But it will limit you a lot financially in your young years.
No matter how you choose to fix this debt problem, ask for help and stick to wise financial habits. The last thing you want is to rush things and fall for a student loan recovery scam.