One of the many things to consider when you apply for student loans is how you’ll pay for them after graduation. For most people, a student loan is their first foray into debt.
Since your student loans amount to a similar debt you might take on for a car, think about the details the same way. Don’t fall into the trap of doing what’s easiest without considering how you’ll manage the debt.
Many programs can help you pay off your loans or even have debt forgiven. But qualifying for them means understanding them. It’s best to plan ahead and make sure the student loans you take qualify for programs designed to help after graduation.
Depending on your major and the field you go into, you may qualify for student loan forgiveness grants.
Volunteer programs like AmeriCorps, PeaceCorps and VISTA offer forgiveness of up to 70% of your loans in exchange for time served. Each program requires at least a year’s commitment to qualify. In some cases, you can also defer payments while you serve. Check their websites for details.
If you have a Perkins loan, and you’re going to teach, forgiveness is offered for teaching in low-income or underserved areas. The more years you teach, the more debt is erased. Your local school board can tell you more about opportunities.
Nurses and other medical professionals can have debt forgiven when they serve in high-need or underserved areas. NURSE Corps offers up to 60% forgiveness and the Public Service Loan Forgiveness and Nursing Education Loan Repayment Program offer programs to decrease your debt. Only certain types of loans qualify. Search for “nursing loan forgiveness” to learn more.
Service in the Army, Army National Guard, Air Force, Air Force National Guard, and the Navy can reduce your debt by up to $20,000. Search for “military loan repayment” for details.
If your chosen profession doesn’t pay well, you may qualify for income-based repayment plans that allow you to drop remaining debt after10 to 25 years, but you’ll have to have paid regularly, on time, under the conditions of the plan. Make sure you understand all the qualifications before you sign up.
You can also consolidate student loans into a single loan; if you’re considering loan forgiveness, be aware of the impacts that can have. Only Direct Consolidation Loans qualify for most forgiveness programs.
When you refinance student loans, you get better interest rates and lower payments, but you have to meet the bank’s qualifications. Private refinancing means giving up most of the opportunities for forgiveness, but in some cases, it’s the best avenue to take. Consider having someone experienced with loans help you make your decision.
Your choices for reducing debt are unique. The best advice for one student won’t work for another. Get out your loan paperwork and a calculator and do the math. Research options, plan a budget and accept advice from people who know your situation and understand finance.