Student loans continue to be one of the hottest topics in personal finance and for good reason. The current outstanding student loan debt in the U.S. is close to $1.3 trillion and the average student loan debt per person stands at close to $30,000. The massive amount of outstanding student loan debt impacts our economy and affects all of us in a variety of ways.
Due to the monthly cost of paying back their student loans, college graduates are delaying the purchase of new homes and cars, instead choosing to move back in with their parents in order to make ends meet. Individuals carrying the burden of student loan debt are also delaying marriage and starting a family. The vast industries that support these life milestones are affected.
Studies are emerging that indicate fewer people are starting small businesses, the very backbone of America's job creation, because their debt load makes an entrepreneurial venture too risky.
But there is more. With recent graduates unable to afford paying on their student loans, the burden goes to parents that co-signed on the loans. Forced to pay their child's student loan debt, many Americans are finding it difficult to adequately save and prepare for their own retirement.
One positive study that I came across gathered data that suggests young workers that have student loan debt are putting money into their 401Ks at the same rate as co-workers that are not hindered by the burden of such debt. I was a bit surprised by this study but also encouraged.
Fortunately for those of you with federal student loans, there is an array of repayment plans that can help you pay off your student loan debt while staying on track to reach your financial life goals. I wanted to share a few key resources that you can use to organize your student loan debt so that they are more manageable for you.
Start by gathering your student loan information by following these steps:
1. Log on to the National Student Loan Data System - NSLDS.ed.gov
2. Go to the bottom and click on MyStudentData download, click Agree
3. Go to the Create FSA ID tab and fill out the form.
This will give you access to all of the details on your student loans including: type of loan, repayment method, balances, loan status and disbursements. Once you have access to this information, you may want to print out the details for your convenience.
Next, sign on to your loan servicer's website (Navient, Nelnet, Great Lakes, etc). Click here
and scroll down a bit to find the contact information for your federal loan servicer. Log into your account with your loan servicer to get more detailed information about your loans, repayment plan and history.
Next, research repayment options to see if there is a better plan for you. If you can easily afford the standard 10-yr repayment plan, then stick with it as this is the fastest and least expensive way to pay off your student loan debt. If, on the other hand, you are struggling to make ends meet and are living paycheck to paycheck then explore an income based repayment plan. Information on repayment plans can be found at studentaid.ed.gov/sa/repay-loans/understand/plans
There may be a variety of payment plans that you qualify for. To find out which one is best for you punch the information you collected from the NSLDS on your loans into the repayment calculator
I have almost always found that loan consolidation is very helpful in managing your federal student loans as it is much easier to manage one payment as opposed to many. Click below to find good info on loan consolidation: https://studentaid.ed.gov/sa/repay-loans/consolidation
Important: Avoid Student Loan Scams
There are a lot of companies preying on individuals that are struggling to pay their student loans. These are the same companies that preyed on those that were under water on their homes following the housing debacle of 2008. These companies charge as much as $500 to file paperwork that you can do yourself for free or make simple phone calls on your behalf to restructure your student loan debt. They will also skim off of your monthly payments as they "assist" you in paying off your loans. DO NOT FALL FOR THIS. All the forms and information you need to tackle your student loan debt are readily available at studentaid.ed.gov.
I am also more than happy to help you navigate this process if you have any questions.
If you are in Default on your Student Loan Debt
If you are in default, relief might require just a simple phone call to your loan servicer to restructure your payment plan. If that does not work than there are ways that you can rehabilitate your loans. Email me and I might be able to assist you. Email Shane
Private Student Loans
Private student loans are an entirely different animal than Federal student loans. If you have private student loans, your options are limited for repayment plans. If you have private student loan in default, get in touch with me. Email Shane