Student Loan Debt Continues to Burden 7 out of 10 Recent Grads
With the election season upon us, many issues are coming to the forefront ahead of the election season. One of the more controversial issues has been student loan debt. Traditionally, student loan debt hasn’t been the most interesting topic for politicians and mainstream media. That being said, student loans have become such an enormous issue that politicians have quickly realized student loan debt could be a lucrative running point. The class of 2015 graduated with more student loan debt than ever before. It has been reported that 7 out of 10 college graduates now graduate with some form of student loan debt. And, over the last decade the amount of student loan debt has ballooned a remarkable 300% to $1.2 trillion.
If you have student loans you know the pain. Student loan debt is hindering our college graduates from financial freedom. In this article I want to highlight a few options available to help student loan borrowers relieve themselves of their student loan debt.
Refinance Student Loans
We all know that you can refinance a mortgage and an auto loan. But I bet you didn’t know that you can actually refinance your student loans too. Whether you have federal or private student loans it doesn’t matter. Both federal and private student loans are eligible for refinancing.
Student loan refinance is a new concept for Americans. The industry has been pioneered by a number of new companies that are unfamiliar to most. The traditional banks on Wall Street haven’t yet entered the student loan refinance market. Bank of America, Chase, and Citi are no where to be found. Instead, new technology companies like CommonBond, LendEDU, SoFi, LendKey, and Earnest have led the market.
Refinancing student loans is a great option for student loan borrowers with high interest rates. If you find yourself paying 6.8% on those federal student loans, or +10% on those private student loans, you should know that you can dramatically lower your interest rate with student loan refinance. Student loan refinance rates start below 2% for very qualified borrowers. I recommend that you compare student loan refinance companies with one of the few student loan refinance marketplaces. There are so many student loan refinance companies, you need to compare rates to make sure that you are getting the best deal. In general, you need to have very strong credit and a long history of on-time payments. Moreover, you will likely need a debt to income ratio below 45% and yearly gross income over $50,000. If you don’t think you meet these requirements, try applying with a cosigner. Having a cosigner can greatly improve your chances of approval. Some student loan refinance lenders even offer cosigner release after 24 months.
By refinancing your student loans, you won’t make them disappear, but you should be able to save quite a bit of money. According to their website, SoFi’s average borrower saves an astounding $14,000!
Student Loan Forgiveness
Student loan forgiveness has been a hot search term in recent months. Late night television ads, telemarketers, and radio personalities have done a lot of work promoting student loan forgiveness. The one thing in common about all of these promotions is the fact that they all promise student loan forgiveness is available for everyone. This is simply false. Student loan forgiveness is a real program offered by the Department of Education. That being said, not everyone will qualify for student loan forgiveness.
The Department of Education offers student loan forgiveness through the Public Service Loan Forgiveness Program (PSLF). Public Service Loan Forgiveness is available for employees working in the public sector. The Department of Education states that “Qualifying employment is any employment with a federal, state, or local government agency, entity, or organization or a not-for-profit organization that has been designated as tax-exempt by the Internal Revenue Service (IRS) under Section 501(c)(3) of the Internal Revenue Code (IRC). The type or nature of employment with the organization does not matter for PSLF purposes.” Moreover, you must make 120 on-time monthly student loan payments before you are eligible for student loan forgiveness.
If you work in a public sector job, and you have federal student loan debt, you should strongly consider planning for the PSLF program. Only federal student loan are eligible for forgiveness. Private student loan are not eligible for forgiveness.
