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  • Writer's pictureInno Wambugu

Student Loans & How They Can Ruin Your Future | Simple Success Podcast

The current economic crisis has hit many people hard, but it’s not just the unemployed who are suffering. Student debt is a huge problem for millions of people, and now more than ever before, students need to be aware of their options in order to avoid being trapped by high-interest loans.

If you have been laid off from your job or even if you haven’t yet found one, there are still ways that you can pay back your student loan debts without going into default. You may be able to get some help with this if you apply for an income based repayment plan; however, these plans do come with some limitations.

What Are Federal Student Loans?

Federal student loans are government backed loans given to students so they can attend college. The money is provided by the U.S. Department of Education through the William D. Ford Federal Direct Loan Program. These loans are guaranteed by the United States Government and are considered “safe” because they are backed by taxpayers. This means that if you don’t repay your loan, the government will make sure that you are repaid.

However, the interest rate on federal student loans is higher than most private loans.

How Do I Get My Student Loans Paid Off?

There are two main types of repayment programs available for federal student loans: Income Based Repayment (IBR) and Pay As Your Earnings (PAYE). Both require monthly payments, but each has different requirements.

Income Based Repayment (IBR): Under this program, your monthly payment depends on how much you earn. For example, if you earn $10,000 per year, you would only owe about $50 per month. On the other hand, if you earn $60,000 per year, then you would only owe about 10% of your total balance ($1,500), which is less than half of what you would pay under PAYE.

Pay As You Earn (PAYE): Under this program, you make a fixed amount of payments every month regardless of your income level. For example, if your monthly earnings were $2,000, you would pay $200 per month.

How Much Can I Afford To Pay Per Month?

You should always try to make as little money as possible while paying back your student loans. It doesn’t matter whether you are making minimum wage or earning six figures, you should never borrow more than you can afford to pay back.

You should also consider the fact that you will probably spend at least 20 years paying back your student loans, so you should aim to save enough money to cover all of your expenses during that time.

Can I Refinance My Student Loans?

Yes, refinancing your student loans could lower your monthly payments significantly. But, you must first understand exactly how refinancing works. When you refinance your student loans, you take out new loans that are usually smaller than the original ones. In exchange, you receive a lump sum of cash equal to the difference between the old and new balances.

However, you cannot use this money to reduce your payments. Instead, it goes towards reducing your principal balance. So, in order to qualify for refinancing, you need to be current on all of your payments.

If you are unable to refinance your student loans right now, there are still ways to lower your payments. One way is to consolidate. Consolidating your loans into one large debt makes your payments easier to manage. Another option is to get an income-based repayment plan. With these plans, you make regular payments based on your income instead of your outstanding balance.

What Are Some Other Options?

If you have bad credit, you may not qualify for any type of loan. However, you can still find options that allow you to finance your education. For example, you might want to look into federal PLUS loans. They are similar to federal student loans, except that they are offered directly from banks rather than the federal government.

Private Student Loans

Another alternative is to enroll in private lenders who offer flexible terms and low interest rates. Plus, they often provide additional benefits such as free counseling and financial planning services.

Doing Nothing

The last option is doing nothing. This means that you continue to make payments on your existing loans until they are paid off. If you do nothing, you will end up owing thousands of dollars when you graduate.

The Bottom Line

There are many different types of student loans available today. Each has its own set of pros and cons. The best thing you can do is research each option thoroughly before deciding which one is right for you.

College student loan consolidation

A lot of people don’t know about their rights when dealing with student loans. There are some things that you can do to help yourself.

College students are notorious for taking out massive amounts of student loans. And although most people think that they will eventually pay them off, most never do.

But what happens if you default on your student loans? Can you lose your home or car? What kind of legal action can you take against someone else? These questions and more are answered here.

How To Get Out Of Default On Your Student Loan

You should always try to avoid getting into default on your student loans. It’s easy to fall behind on payments because you simply forget. Or maybe you just didn’t realize that you were going to miss a payment. Whatever the reason, once you are in default, you become responsible for repaying the entire amount owed.

So, what does being in default mean? Well, it basically means that you owe back every single penny that was borrowed plus interest. In addition, you could also face criminal charges.

So, How Do You Get Out Of Default?

If you are currently in default, you need to act quickly. Otherwise, you risk losing everything. But, fortunately, there are several things that you can do.

First, contact your lender immediately. Explain why you missed a payment. Ask for forgiveness. Tell them that you will be making all future payments. Also, tell them that you want to work something out so that you can keep your house.

Second, talk to a lawyer. A good attorney will be able to help you figure out exactly what you can do to save your home. He or she will also be able to advise you on whether or not you should file bankruptcy. This is because student loans are considered “non-dischargeable debts” in bankruptcy court. That means that even if you file Chapter 7 bankruptcy, you will still have to repay your student loans.

Third, start looking for new jobs. Find a job where you can earn enough money to cover your monthly expenses. Then, ask your employer to forgive the rest of your debt.

Finally, consider consolidating your debts. Consolidation allows you to combine multiple loans into one manageable payment. This makes it easier to manage your finances.

Can I Lose My Home Because Of My Student Loan Debt?

Yes, you can lose your home. Many people who get into trouble with their student loans end up losing their homes. If this happens to you, then you may qualify for government assistance.

However, you cannot use federal programs like this unless you are current on your other bills as well. So, make sure that you are paying your mortgage, utilities, insurance, etc. before applying for any aid.

What About Car Repossessions?

It is possible to lose your car. The same rules apply to cars as they do to houses. If you don’t make your payments on time, then you may lose your vehicle.

However, you must first prove that you are unable to pay. For example, you might show proof that you have lost your job. Or perhaps you have been diagnosed with cancer. Either way, you must provide evidence that shows why you can no longer afford to make your payments.

In some cases, you may be able to negotiate with your bank to lower the amount that you owe. However, if you fail to make any payments at all, then you may find yourself facing foreclosure.

How Much Can I Expect To Pay On My Student Loans?

The amount that you will actually pay depends on many factors. First, you will need to determine if you are eligible for consolidation. Once you know this, you will need to calculate your total balance. Next, you will need to factor in the interest rate that you are charged. Finally, you will need to add in any fees that you incur while trying to consolidate your loans.

Once you know these numbers, you will be able to estimate how much your payments will be each month. You can then compare this number to your income. If it exceeds your budget, then you may need to look for another job.

If your loan balances exceed $100,000, then you may be required to begin repaying your student loans early. In fact, you could be forced to pay back 10 percent of your outstanding balance every year.

This is called the “10/10 rule.” It was created by Congress to encourage students to graduate from college within four years. If you fall behind on your payments, then the Department of Education may garnish your wages.

How We Overcome Debt

Debt can be a very stressful thing to deal with. It can make you feel like you have no control over your life, and that there is nothing you can do about it. In the book Joy, co-authored by the Dalai Lama and Bishop Desmond Tutu, we learn of the importance of laughing at things you cannot control. There's something to be said for letting that kind of thing go, to not twist your thinking into ways to make things better, like credits or even a tax refund, but instead recognizing and realizing the benefits of circulating money.

But, if you want to get out of debt, then you need to change this mindset. You need to realize that you do have some control over what happens to you financially, so you should take advantage of it. This means that you need to start thinking about ways to pay off your debts.

I'm calling you to take action right now. That’s today’s cost of living.

We’re changing the way we look at things, and

Remember, “THAT’S GOOD”.

Also remember, this is Financial Life Coaching from A Happiness Perspective! Coaching Happiness.

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