Episode 36 -Everything You Need To Know About Your Student Loans & How To Get Rid Of Them W/ Robert Farrington – Journey To Launch (2024)

FAQs

How do I deal with a massive student loan debt? ›

Otherwise, a better long-term strategy is enrolling in an income-driven repayment (IDR) plan that ties payments to your financial situation. If you're unemployed, or your income is low enough, your monthly bills could be $0 under an IDR — and you'll earn credit towards student loan forgiveness.

Your interest charges will be added to the amount you owe, causing your loan to grow over time. This can occur if you are in a deferment for an unsubsidized loan or if you have an income-based repayment (IBR) plan and your payments are not large enough to cover the monthly accruing interest.

Let's say you have $200,000 in student loans at 6% interest on a 10-year repayment term. Your monthly payments would be $2,220. If you can manage an additional $200 a month, you could save a total of $7,796 while trimming a year off your repayment plan.

Let's say you currently owe $200,000 on your mortgage and you want to pay it off in 5 years or 60 months. In this case, you'll need to increase your payments to about $3,400 per month.

You can get a deferment for up to three years on your federal student loans if you're unemployed or unable to find full-time employment. Deferments are available for federal student loans, but not always for private student loans.

Therefore, if you leave your job at a qualifying employer after meeting the PSLF eligibility requirements but before you apply for loan forgiveness, you won't be eligible for forgiveness since you must be working for a qualifying employer both at the time you apply for forgiveness and the time you receive it.

If you will be incarcerated for 10 years or more, you can ask the government to write off your defaulted federal student loans.

Can student loans take away my house? ›

Student loans are a form of unsecured debt not backed by collateral. So, your home or car cannot be seized if you fail to make payments.

The short answer to the question of do student loans ever go away? is no, unless you're part of the Public Service Loan Forgiveness Program. Unlike other forms of debt, such as home and auto loans, student loans generally cannot be discharged during bankruptcy.

If you default on your student loan, that status will be reported to national credit reporting agencies. This reporting may damage your credit rating and future borrowing ability. Also, the government can collect on your loans by taking funds from your wages, tax refunds, and other government payments.

If you are facing a loss of income, even temporarily, there are options to bring your federal student loan payments down to $0 for a year, without accruing additional interest.

A deferment is a period during which you are entitled to postpone repayment of your loans. Interest is not generally charged to you during a deferment on your subsidized loans. Interest is always charged to you during a deferment on your unsubsidized loans.

If you're a recent college graduate with a mountain of student loan debt — say $100,000 or more — paying off such a large amount could be a major struggle. For example, if you're making payments on federal student loans under the standard 10-year repayment plan, your minimum monthly payment might be quite daunting.

Student loan debt in excess of $100K can cause you to pay thousands in interest charges, and your monthly payments can take up a substantial amount of your cash flow. However, there are ways to make your payments more manageable and even accelerate repayment.

The average borrower takes 20 years to repay their student loan debt and accrues $26,000 in interest over 20 years at the rounded average interest rate of 6%. If those monthly payments look low compared to what most borrowers pay, it's because most borrowers carry a lot more than $20,000 in student loan debt.