At GreenPath Debt Solutions, we work with people, everyday, who are looking to get their debt under control. More and more, we hear stories of individuals who are burdened with student loan debt. Below is a question we recently answered in USA Today.
Q: I have student loans totaling over $80,000. I am a full-time public school teacher and can’t afford my monthly payments. What should I do?
A: Depending on who is subsidizing your student loans and where you teach, there could be several options available to you in order to reduce your monthly payment.
There is a new federal program called Income Based Repayment (IBR) that adjusts your monthly student loan payment relative to your current income level and family size. Also, there is a provision that if you are working as a teacher, at a non-profit, or as a public service employee, you could be eligible for the loan to be forgiven in full after 10 years of qualified payments. Learn more at http://www.ibrinfo.org/.
Stafford Loans have a specific program for teachers, in which up to $17,500 in principal and interest can be forgiven after five years of teaching in a low-income area or other districts that meet specific requirements. A call to your student loan lender can help you find out if you are eligible for this.
Since not all student loans participate in IBR or loan forgiveness, you could certainly ask your lender about a graduated payment. Graduated payments result in a lower payment for a pre-determined amount of time, but the payments will eventually increase. This could make sense if you felt something will change in your financial situation. Make sure to ask the lender in advance what your payment will be when it increases, because it will be necessary to have the income to meet this payment further down the road.
If you’re experiencing a short-term hardship, it could make sense to contact your lender about a deferment or forbearance plan. This could mean that your lender will not require payments for a period of time. Make sure to ask your lender if it will continue to charge interest, or if the interest will be stopped during this hardship.
- Look into the Income Based Repayment program at http://www.ibrinfo.org/.
- Ask your lender about graduated payment
- Ask your lender about a deferment or forbearance plan.
And, as always, be a smart consumer!