By Jena Collier on January 25, 2011
.jpg.aspx?width=75&height=75) As the economy continues to stagnate, more and more people are having trouble paying back their student loans. And, although student loans are known as the “nice loans” of the lending world, they may be harder to get out of or pay back than even credit card or mortgage debt nowadays.
While credit card debt, tax debt, and mortgage debt allow you to either settle your debt or give up your house as a way to get out of debt, student loan debt doesn’t really offer any such options. Sure, the interest rates may be lower and it may seem worth it for the future benefits an education can bring, but once school ends and your salary, or lack thereof, leaves little left after $600+ a month payments, you might start to rethink the nickname.
Those with significant amounts of student loan debt can feel like a slave to the payments, pushing off traditional steps to adulthood such as buying a house, an engagement ring or even a car for years longer than those who graduate without the debt. And as the U.S. government offers ‘bail-outs’ to banks and consumers with upside-down mortgages, those with student loan debt are beginning to ask where their relief may be.
As of now, Congress has passed two initiatives to help those with federal loans with repayment. The Income-Based Repayment Plan, part of the College Cost Reduction and Access Act of 2007, caps your monthly payments to less than 10% of your income and releases all remaining debt after 25 years.
The Public Service Loan Forgiveness Program, part of the same Act, allows public servants to pay income-based monthly payments and discharge their debt after 10 years of employment in the public sector.
The federal government may also erase your debts if you engage in certain volunteer programs, such as AmeriCorps or the Peace Corps, or go into certain professions such as non-profit work, medical work, or, as mentioned above, public service.
Nobody should regret going to college, or be afraid to go to college, because of the fear of student loan debt. There exist many opportunities and programs for students to repay their student loans without debilitating your financial situation. |