Student Loan Repayment Tips

I’m spending more and more time talking with prospective clients about their student loans. No, I’m not suggesting that they should file bankruptcy to wipe out their student loans.   It’s simply getting hard to avoid talking about student loans when I see such large balances and on such a widespread basis.

I’m talking more than ever about strategies to control their student loan payments once folks have gotten out of bankruptcy. Of course, the student loan companies never provide this kind of advice, which is a disservice to young people.

Income Based Repayment Program

Here are my two tips. If you’ve got federal student loans, then look into the Income Based Repayment program (known as “IBR”). If eligible, you can put all of your federal student loans into one repayment amount that might better take into account your actual earnings and expenses. Once you’re in the IBR program, the downside is that you have to re-submit your income figures every year thereafter. This is because your payment amount can be readjusted for your current income, whatever it is in the future. Nevertheless, it can be a lot better than struggling under a burdensome payment amount. And it’s a lot better than defaulting on your loans.

Public Service Loan Forgiveness Program

The second tip is to learn about the Public Service Loan Forgiveness Program. Again, it’s only for your federal student loans, but if you work for a non-profit organization for more than 30 hours a week, then you can be eligible for this program. If you make all your payments for 10 straight years (120 monthly payments), then the balances of your federal loans are discharged (wiped out), no matter the existing balances.

So there, two quick tips on programs that can greatly help folks with federal student loans.