Student loans are probably one of the many problems almost every single American student have in common. Managing your student loans can be difficult as it depends on what school you go to, how long you were there, and the course you took. After four years, you will most likely put yourself on as much as $100,000 student debt, more if you took a graduate degree. It’s a serious issue affecting the economy and leaving millions of people with feelings of defeat and hopelessness
But don’t worry, you’re not alone. There are more than 44 million people who collectively owe $1.5 trillion according to personal finance website Make Lemonade. Although many of them hope for student loan forgiveness, the reality is not everyone will qualify.
The three primary types of student loan forgiveness offered by the federal government for federal student loans are income-driven repayment plans, public service loan forgiveness, and teacher-student loan forgiveness. Other student loan forgiveness is through state programs and other organizations.
So how are you going to dig yourself out of a heavy debt due to your education? Take a look at these dos and dont’s to make sure you’re on the right path towards student loan forgiveness.
Don’t: Expect Loan Forgiveness
Loan forgiveness sounds so good but it’s best that you don’t expect you’ll qualify for it. You’re going through hard times and you have to deal with that. Unless you think a for-profit degree mill is scamming you and are actively pursuing legal retribution, never stop making your payments.
Do: Establish a Strategy
Create a plan and establish a sound strategy to make sure that you’ll still be able to save tons of money even if you’re facing an unbelievable high amount of debt right now. You have to consider shaving off of your repayment window as well. Some of the best things to do is taking a closer look at your financial situation or meet with a financial advisor. Do your research and look for strategies to dig yourself out of from student debt. Don’t just settle for simply paying the minimum balance every month, more strategies are available more than you think.
Don’t: Assume Your Jobs Qualifies You
It’s wrong to assume that you will qualify for Public Service Loan forgiveness just because you're working in public service. It is actually your employer that matters, not your role. Those who work with a non-profit but are employed by a private company does not qualify them for public service loan forgiveness.
Do: Re-submit an Employment Certification Form
Your public service employment will be properly tracked if you complete an Employment Certification Form and re-submit it every year to the U.S Department of Education.
Don’t: Jump Into Consolidation or Refinancing Right Away
Only consider consolidation and refinancing as options which means there’s no need for you to jump at them right away just because you can. Although depending on your circumstances, it may be best to go for it but there are disadvantages that you need to keep in mind such as losing perks or getting hit with fees.
Do: Pay More if You Can
As mentioned above, it’s best to pay more than just making minimum payments. This will not only help lower down your principal balance faster but it will help you save money in the long run on interest as well. It’s true that not everyone has the ability to make extra payments or even apply more of their paycheck to their loan balance. But if you think you can, paying more is definitely better and more beneficial for you.
Remember that you’re not required to pay your loan at once. Let your repayment plan know your financial situation. Most companies will give you enough time to pay if you discuss your situation with them appropriately.
Don’t: Assume Student Loan Forgiveness is Free
Unfortunately, student loan forgiveness is not free and it will more likely cause you to make a minimum monthly payment depending on your income and other factors.
Do: Be Aware of the Tax Payment Coming From Student Loan Forgiveness
Income-driven repayment plan such as PAYE or REPAYE will likely make you pay income tax on the amount of student loan forgiveness you receive.
