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How to Reduce Student Loan Debt

Written By jeremy hunk on Sunday, June 20, 2010 | 6:53 AM

Believe it or not, reducing student loan debt is possible with a little research and persistence. See our guide on how to reduce student loan debt to understand the intricacies of debt reduction.
Generally easy to get and apparently "justifiable debt (not that you buy a flat screen TV card almost maxed enormous credit), student loans are still the cause of serious conflicts between the new graduates. The student loan industry has been criticized for misleading students about the realities of the wave of half the reimbursement of interest rates. As college costs continue to rise, however, students use larger loans. If you're one of many former students are trying to reduce what you need for your existing student loans, there are steps you can take to reduce your payments and reduce the overall debt. Read on to know specific measures for the treatment of your situation intelligently. 

# Talk with a professional

* Before you begin actively to reduce your student loan debt, it is best to consult a professional.

1. If you have federal loans issued directly, you can get advice on the individual options directly by the Ministry of Education by logging into their site federal student aid and access to information.
2. You can also talk to a financial aid counselor at your school. Although he has been a long time, should remain available to give you good advice.
3. For loans issued by private parties, contact your lender and ask to speak to a consultant. Even an agent of Customer Service should be able to provide details about your loans and all options for changing interest rates and repayment schedule.
4. And if you do your own taxes or they have a professional, you should talk to someone to make sure that you deduct the loan interest student accurately.
# Step 1: Assess your debt

* The first step in reducing debt is understanding.

1. Ask yourself the following questions before proceeding:

1. Your loans federal loans or private loans? (That you have been issued from the government or a private bank or a lender?) For more information on certain types of loans, go to the explanations FinAid student loan.
2. Note that your federal loans are usually set at a relatively low rate, while private loans calculate interest at a variable rate that depends on your current credit rates.The New York Times: Try to buy student loans (May 2 2007 1)
3. What type of loan you have, for example, Stafford, PLUS, Perkins? Your loans or grants? (A subsidized loan, you need based, does not need to make interest payments while in school. On an unsubsidized loan, interest accrues while you are at school if they repay the loan, or not.California State University Sacramento vs. subsidized subsidized loans2)
4. How debt do you have? Across how many donors?
5. You are currently in a grace period before repayment begins?
6. What is your repayment period (for example, it is expected to repay the loan in 10 years? 15?)
7. What are the interest rate you pay on loans?

2. Learn more about your individual federal loans, you can go to the National Student Loan Data System and search for the information ready with your Social Security number and other personal information.
*- Before accessing this information, however, you must register for an ID number, if you do not already have one.
3. For more information about the differences between federal loans and private loans, student loans Borrower Assistance will organize a series of introductory guides to understanding how student loans work.
4. Another great resource to understand your student loans is simple lessons that not only provides detailed information on individual loans and their options, but you can compare prices for deals or new consolidation loans.
5. Research your private loans on the creditor's website (almost all creditors will allow you to manage your online account with a username and password), and bookmark the site for future reference.
6. After collecting all relevant information, to learn more student loan FinAid list to keep details of your loan and organized in a different document.
# Step 2: Consider Consolidation

* One way to reduce the monthly payment and reduce interest rates is to consolidate in a lender will give you a fixed rate of your loan.

1. The consolidation loan means that you combine your different loans and put in a new fixed rate. It's like a mortgage.FinAid Refinancing: Student Loans Consolidation3
2. Consolidation loans mean that if rates go up, your stay will be. Otherwise, if there is a dip in interest rates, you still pay the same fixed rate.Federal Student Aid: Loan Consolidation4
3. Student loans consolidation loans are available for most federal loans, including FFELP loans (including Stafford, PLUS loans and SLS), FISL, Perkins, student loans, health professional, NSL, healing, Direct and guaranteed loans.FinAid: Consolidation3 student loan
4. There are also options available for consolidating student loans private, private.
5. To better understand the advantages and disadvantages of consolidation, see Simple Course Guide to Student Loan Consolidation, which will open its doors as a PDF file.
T * Do not be worried about the dates on the old guide. Although it was published some years ago, learning content for the consolidation loan is based on general information - not laws or other time-sensitive data.
# Federal Consolidation Loans

1. Evaluate the pros and cons of consolidation loans with your specific in mind.
2. Note that you can pay more generally, when you consolidate, because they are extending the term of the loan (even if the monthly payments are lower). Help students to the borrower: Advantages and disadvantages of Consolidation5
3. You'll also need to decide to consolidate your loans is a good idea, or if you just consolidate some of them. Because your rate is determined as the average of your current rate, we want to maintain an equation more rate loan if you feel you can continue to bear fruit.
4. U.S. Department of Education loan calculator to understand what your consolidated rate would then determine whether it is worthwhile for you to consolidate.
OR Tip: Try to calculate the rate of not including loans at high interest to decide to consolidate all or part (or one) of your loan.
5. To determine the rate of consolidation, the lender will calculate a weighted average of outstanding loans, and then rounded to the nearest, not eighth, but to exceed 8.25%. Student Aid Federal: Loan Consolidation4
6. Double-check the rates for the calculation of potential consolidation with consolidation loans FinAid.
7. The interest rate also depends on the type of federal loans you have, as they did when out.Federal Student Aid: Loan Consolidation4
8. You can also lock in a lower rate of consolidation of consolidation during the grace period (the months immediately after graduation, during which most banks will not force a refund). Student Aid Federal: Loan Consolidation4
O Note: consolidation during the grace period - but ultimately useful because it reduces the overall rate of interest - is not in force immediate repayment, but he still had a few months before payments were to begin.
9. It's good to start early, but remember that you can not consolidate loans if they are currently school.Federal Student Aid: Loan Consolidation4
10. It is not advisable for borrowers to consolidate federal loans into a private loan because you will lose important privileges for federal loans, including deferment options, the allocation request or receive debt relief under the government loan the borrower programs.Student: Advantages and disadvantages of Consolidation5
11. If you look around the consolidation of facilities, remember that in no event be liable to pay a fee to consolidate your federal loans.FinAid: Student Loan Consolidation3
# Consolidation of private loans

* E 'can consolidate private loans, and this may be a way if your credit score is higher now than it was when he signed the loan to help the borrower loan.Student: Only One Chance6

1. You may be able to consolidate your loan with your original lender. It would be best to start there to see what rates may be available.
2. If the creditor is offering a rate of consolidation is fascinating, you should compare shop to find the best course of consolidation offer.Simple: Private Student Loans Consolidation7
3. Note that private consolidation loans based on credit scores and / or your co-Mr. of.
4. Be sure to research all the rights associated with them before deciding what is profitable to consolidate private loans.

# Step 3: Evaluate the repayment options

* Repayment terms can vary significantly.

1. The options for the return of change generally based on two factors: the duration of the loan and the percentage of participation in each payment.
2. federal reimbursement options are as follows: Student Loans Loan Assistance: reimbursement of federal loans Plans8

1. Standard Payment: Payment Standard is the payment schedule of each borrower is assigned. (FFEL borrowers 45 days to adopt the plan after having been notified by lenders to choose a repayment plan.) Standard plans have higher monthly payments because the terms are between five and ten years, which means you can pay less overall on the loan. Note that the monthly amount payable may vary if you have a variable interest rate.
2. deferred payment: If you total outstanding student loans that exceed $ 30,000, you can repay the debt over a fixed or graduated payment schedule for a maximum of 25 years (most repayment plans range from 10 years ). Why did you extend the loan, your monthly payments will be slightly "below, but you will pay more interest for the loan.
3. Graduated payment: graduate is exactly what it seems, with payments from the bottom and gradually increase during the repayment period. Graduated plans are useful for borrowers who are just beginning their careers and are more likely to have higher incomes over the years.
4. Payment based on income: There are two types of payment plans based on income, by type of loan you have. If you have FFEL loans, the monthly payment is due based on your gross monthly income. If you have direct loans, are eligible for payments very low (or no payments), based on assistance loan borrower income.Student: Plans8 increase federal loan reimbursement payments as income increases, but the payment may be required no more than 20% of all income above the poverty line. With either option, you must provide financial information, including tax returns for your lender. There will be a new program of income, after July 2009, which will use a sliding scale.The Project Student Debt: basic income Repayment9
5. Payment Perkins Loans: Perkins works differently from other federal loans. The government provides a uniform payment per month minimum, currently $ 30 for a loan or NDSL Perkins loan before October 1, 1992 and $ 40 after date.US Department of Education: Federal Perkins Loan Program10

O Note: These options are specifically for federal loans, private loans are not required to offer the same conditions. Although private lenders may offer options for deferment, you need to read the fine print of the contract to determine the possibility of loans for borrowers are.Student Assistance: Federal Loan Repayment Plans8
3. See examples of different monthly payments and total amount paid for the repayment options on the graph Student Loan Borrower Assistance switch repayment options.
4. Then again FinAid loan calculators to reassess the differences between repayment plans.
5. Depending on income and other financial factors, choose the repayment plan that best suits your needs and you will pay less total interest for the duration of your loan.
# Prepay your loan

* If you're on a major windfall might be a good idea to go on loan repayments.

1. With federal loans, there is never a prepayment penalty. Additional payments are applied to interest and then to principal, unless you specify that the additional payment should be applied to principal.FinAid: Reimbursement Plans11
2. Even though private loans are not required by law to be free of any right of redemption, almost all are able to compete for your business.FinAid: Prepayment12
3. Make sure to write a note stating your intention to request an additional payment towards the capital, instead of advancing the date of your next payment.FinAid: Prepayment12
4. Direction to repay the loan with the highest amount in interest], then the other above, etc. In general, the reduction of debt in the event of payment, we begin with credit cards, loans and private loans PLUS and Stafford loans, and, finally, Perkins loans.FinAid: Prepayment12
5. See FinAid payment calculator to determine how different payment methods will change the life of your loan and the total interest paid.
# Step 4: Pay on time, every time

* Creditors reward you for payments time constant.

1. Sign up for auto-pay your monthly payments automatically deducted from your bank account. Make sure you always able to cover the payment the day it is due.
2. Some loans allow you to move your due date (for example, if you normally have a payment due for 22 months, you can ask to be changed to 1), to coordinate with income payments.
3. Some lenders will give you a reduced rate if you make a number of timely payments. For example, after 48 installments right you will often see a project rate discount.The Student Debt: student discounts report on Federal Loans13
4. The draft warns against student debt, however, it is extremely difficult to make as many consecutive payments on time, without changing the surrender option, and only one late payment even after receiving this reduction may allow your provider to suspend. The Project on Student Debt: student discounts in comparison with federal Loans13

O TIP: Always refer to discounts FinAid loan calculator to evaluate the benefits before signing up for potential discounts.
# Step 5: If you can not pay

* If it is simply impossible to respond to your requests per month and stay afloat, fortunately there are options for you to consider:

1. If your loans are guaranteed by the federal government, you have more repayment options than you would with a private lender. Many federal loans are more lenient to borrowers with low incomes.
2. If you have federal loans that are currently being purchased by a private creditor, seeks to make them take a direct loan to avoid higher rates from private creditors.
3. You can also enjoy exemption from repayment if you are employed by one of the following programs (note that the amounts required to be applied against student debt and have not received cash) FinAid: Loan Forgiveness14
O Peace Corps: Volunteers can apply for deferment of Stafford, Perkins and Consolidation loans and partial cancellation of Perkins loans (15% for each year of service up to 70% in total).
O Americorps: Serve at 12 months and will receive $ 4,725 to use for your loan, plus a decent salary.
O VIEW: complete 1700 hours receive $ 4,725.
or National Guard: students who are in the Army National Guard are eligible for financial aid to students of the capital program, which offers up to $ 10,000.
or teach in an area of low: students who teach full time at a primary or secondary school serving students from low income families can have a portion of their Perkins and Stafford loans forgiven. Additional loan programs for teachers vary by state lose. See American Federation of Teachers looking for resources for teachers loan forgiveness.
or students who exercise their profession in a poor neighborhood, or lawyers in the public interest may also qualify for loans forgiveness.FinAid comprehensive list of loan programs Forgiveness14 See FinAid cancellation of debt, some of which provide eligibility for students living in certain regions or states, to see if they qualify for any exemption.
4. Here are ways to reduce the monthly amount due if you have difficulty paying:

1. Adjournment: more federal loans and private loans, will allow some to stop paying if you are a student still in school at least half an time.FinAid: answering your questions - Glossary (report) 15 You can also qualify for deferment due to economic hardship as a result of increasing a disability.US News & World Report: Get Out Of Debt Student Loans (September 27, 2007) 16
2. Tolerance: If you are a victim of personal injury or economic factors affect your ability to make your loan payments, you may need patience. Tolerance can not afford to reduce or defer payments and possibly extend the repayment period. Tolerance lasts 3-6 months, and you may be able to renew for a period of several years. Note that the payments even if you deferred, interest will continue to accrue.FinAid: answering your questions - Glossary (tolerance) 15

5. You can also pass the repayment plan chosen. Refer to Step 2 in order to better understand the differences between the repayment options.
6. Note that the extension of payments or defer your loan does not extend the term of the loan, which means it can pay more in total over time. This compromise could be useful if you can not meet the monthly payments, but now expect to have a higher income in a reasonable time.
7. Whatever happens, you should avoid going into default (over 270 days late on a payment). Chicago Tribune: The U.S. lending helping hand on student loans (January 27, 2008) 17 If you go into default, the government is able to withhold tax refunds and profits and also lead to short . Single course: Defaulting on Student Loans18
# Step 6: Always update

* Continue to student loan industry research will keep you informed of changes in rates and new information that will help reduce the overall debt.

1. Students from schools like New York University and the University of Pennsylvania have received payments from their schools because of their recommendations for Citibank as a preferred creditor (Citibank was given schools a percentage of their profits, in turn ). The New York Times: Millions to be reimbursed after school College Loan Inquiry (April 3, 2007) More than 19 are said to do the same, that investigations are underway.
2. It might be interesting in a district with financial assistance from your school to see if you qualify for benefits or retroactive payments as in the case of Citibank.
3. Refer to the list of student loan assistance Borrower resource for finding information on different lenders or to contact a legal or financial advisor who can help you with the concerns of students on your loan. The site is a nonprofit service, so you do not have to worry about getting plucked.
4. The New York Times as a "theme Times on student loans, which is actually a news aggregator that brings together virtually all the news in the world of student loans. Check regularly to keep up with information from student loans.
5. FinAid, a site recommended by The New York Times for its financial advice, notes that the subprime crisis has a significant impact on student loans, too.The New York Times: Try to buy Student Loans
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