6 Ways to Kill Off or Reduce Student Debt
Drew Stevens
Financial Advisor | Retirement Educator | Author of "Understanding Social Security - How to Optimize Your Retirement Benefit" | 40+ Years in Financial Services
One of the most daunting projects any individuals and even those that are now doctors or dentists know will ever take on will be an attempt to pay off student debt. If the $240,000 worth of student debt weren’t bad enough, new professionals today are faced with a global pandemic and changes into student debt repayment. As many individuals and even those that are now doctors or dentists know, there are many favorable ways for medical practitioners to forgive student loans or reduce the debt - this is not the case for individuals and even those that are now doctors or dentists knows. To that end, here are six specific methods to achieve success in reducing or paying off this incredible weight.
1. Make Payments Early
Many students and even generally speaking borrowers believe that there is a silent period for loan repayment. This myth cannot be further from the truth. When lenders provide loans for anyone, two things coincide a) the clock begins immediately with an expectation that repayment starts shortly, and b) interest immediately begins to accrue.
Repayment appears onerous to many because once the truth in lending statement arrives, there is an appearance that the loan cannot be repaid. The aggregate amount seems unattainable. Several years ago, this may have been truthful, however, with the positive effects of the global pandemic, interest rates, are at the lowest levels in over 30 years. The incredible single-digit interest rates can make it easier for students to begin repayment.
Low-interest rates enable students to begin repayment much earlier than graduation. There are some individuals while attending University, have full or part-time jobs. Being smart and allocating some of this employment money to loan repayment can quickly eliminate the tremendous burden after graduation. One might be surprised that as little as 50 to $100, every pay period can be enough to remove a few thousand dollars worth of future debt. Prepayment will also be an essential factor because we do know that at some particular point, The United States Federal Government will increase interest rates, and that will have a negative effect on interest rates.
2. Income-driven repayment
An unknown to many individuals is the opportunity to switch to an income-driven repayment plan. Many individuals already know this. However, the average salary for most individuals is approximately $34,000 per year. Bear in mind this figure takes into consideration years of experience, economics, and residential area. With that in mind, some individuals do very well while others struggle. I know that many individuals hold down two jobs while trying to implement find good work.
There is no reason why individuals cannot request an income-driven student loan forgiveness. The only consideration for an income-driven plan is that interest rates will not change. As long as there is full disclosure from the lending institution to the individuals and even those that are now doctors or dentists know, a student loan income-driven plan may be an excellent opportunity to ensure that some of the loans are gathering repayment.
3. Loan forgiveness
Loan forgiveness is not opportunistic for every student. Yet, over the years of working with individuals and even those that are now doctors or dentists knows, there is a microcosm whereby student loan forgiveness might help. As you know, individuals ome from all walks of life. Some had been former financial planners, some have been teachers, some have been professional athletes, while others had served as first responders and even In the United States military.
Depending upon the type of student loan obtained, students should determine whether or not there are forgiveness program for previous years of service. Unfortunately, this means either reading the fine print or calling into the lending institution. However, saving several thousands of dollars will be worth the wait and the impatience if not hundreds of thousands of dollars.
4. Refinance the Interest
Student loan debt, although somewhat tricky, is no different from a mortgage or automobile debt. There is always a principal amount and interest. With so many individuals having concerns and difficulty repaying loans today, there is a possibility that lending institutions may be able to renegotiate loan interest. There is no reason why individuals cannot call into the lending institution to determine if there is a method to refinance the loan. During the current financial crisis, with so many individuals defaulting on homes and automobiles, the last thing a lending institution wants to see is student loan default.
The most recent data indicate that there is:
? $1.64 trillion in total U.S. student loan debt
? 44.7 million Americans with student loan debt
? 11.1% of student loans are 90 days or more delinquent or are in default
? Monthly student loan payment (among those not in deferment) usually range between $200 and $299 on average
(U.S. Student Loan Debt Statistics for 2020. 27 Feb. 2020, studentloanhero.com/student-loan-debt-statistics/)
Albeit, individual lending institutions are somewhat challenging. Which is more critical receipt of one thousand dollars today with a different interest rate or zero dollars tomorrow?
5. Live Like A Pauper Act Like a King Or Queen
I remember the first time I made a substantial amount of money, and all I wanted to do was spend it. We all enjoy the fruits of our labor. As long as those few fruits flourish, we want to enjoy it.
During my coaching and counseling sessions and even my seminars, I regularly teach them the aspects of prudent financial management. Individuals and even those that are now doctors or dentists knows, at some particular point after their training and development, will be running their own business. Unfortunately, entrepreneurship is not typically an aspect taught within the chiropractic universities. Terrific financial management is crucial to the individuals and even those that are now doctors or dentists know establishing the business.
Although there is much to go through here, a vital area of concentration for this particular article is to focus on two aspects in the early days: a) pay yourself and b) pay off debts and expenses quickly. One of the best ways to do this is by establishing a budget and not living above your means. Know to the penny what your monthly expenses are and what you want to save. Once you begin, this simply takes a few hundred dollars every month or a few dollars every week to repay the loan. Repayment must be your priority and living frugally for the first few years will create exceedingly long-term benefits.
6. Alternative Investment Vehicles
I mentioned earlier that some individuals begin their vocation after a stint at other employment. Some of these former employers used investment vehicles such as 401K plans, SIMPLE plans, or different vehicles. Although there may be some penalties for early withdrawal, some of this money may be available for your student loans. Another possibility might be to ask parents or even review whether or not you have whole life insurance. Some policies depending upon premiums and payment schedules have a cash value attached to them that enable policyholders to obtain a cash loan with little interest and no penalties. Please note that using these products requires that you speak with a financial or legal professional for the best advice in using these products for student loan repayment.
#insurance,#retirement,#investments,#mutualfunds,#wholelifeinsurance,#termlifeinsurance,#wealthmanagementservices,#annuities,#taxshelteredannuities,#variableuniversallifeinsurance,#fixed&variableannuities,#disabilityincomeinsurance,#estateconversionstrategies,#educationfundingstrategies,#universallifeinsurance,#charitablegivingstrategies,#pensionpayoutalternatives,#stocks,#bonds,#managedaccounts,#protectionproducts,#retirementstrategyservices,#andfinancialplanning,#finance
Need help and advise on paying off debt DM me for a 20 minute Free idea exchange.