How To Get Out of Student Loan Debt - Featured Image
29.05.2022

How to Get Out of Student Loan Debt (+6 FAQs Answered)

by Milos Djordjevic

Left unmanaged, student loan debt can financially cripple young adults for years to come. With the average student debt approaching $40,000, according to Investopedia, it’s easy to see why the situation can look so dire.

Fortunately, it doesn’t have to be that way.

We want to show you how to get out of student loan debt as quickly as possible and without stressing over it too much.

Let’s look at the options!

How to Get Rid of Student Loans

We’ve outlined the best ways to eliminate your student loan debt. Some are less reliable than others, but all are viable options that could turn your life around.

Research Student Loan Forgiveness Programs

Full-time workers employed by tribal, local, state, or federal governments, or non-profit organizations, as well as teachers and all US servicemen, could benefit from PSLF, short for Public Service Loan Forgiveness program.

Apply for an IDR

If you can’t afford student loan payments due to a low income, an IDR (income-driven repayment) plan could help you. These plans have reduced charges, adjusted to your income and family size, and are offered by the Department of Education. They come in four types:

  • An IBR (income-based repayment) plan allows you to pay a monthly installment of 10 to 15% of your monthly income, without going over what you’d pay with a 10-year Standard Repayment Plan. Those who’ve borrowed before July 1, 2014, pay 15%, while those who’ve borrowed after that date pay 10%. These repayments last 20 years for undergraduate and 25 years for professional study or graduate loans.
  • Under an ICR (income-contingent repayment) plan, you can pay 20% of your discretionary income, or a fixed payment adjusted to your 12-year income, depending on which one is lower. This makes getting rid of student loan debts quicker than it is for an average borrower.
  • Pay As You Earn and Revised Pay As You Earn plans limit payments to 10% of your discretionary monthly income. The first has a repayment term of 20 years, the second allows 20 years for undergraduate and 25 years for graduate and professional study loans.

Learn About Loan Cancellation or Discharge

There’s a possibility to get your loan canceled or discharged completely, which is akin to getting it forgiven.

  • Those with a Perkins Loan (a low-interest loan for those in dire financial situations) may get their student debt discharged totally or partially if they work as a firefighter, nurse, public defender, law enforcement agent, volunteer under AmeriCorps VISTA or Peace Corps, or speech pathologist. You may also qualify for student loan forgiveness in 2022 if you’re a math, science, bilingual education, foreign language, or special education teacher, or if you teach at a low-income school. Complete discharges are available in case of bankruptcy, death, veteran disability, total and permanent disability, school closure, or if your spouse was a 9/11 victim.
  • If your school closes while you’re still enrolled, you can qualify for a full closed-school discharge.
  • If you are permanently and totally disabled, you might qualify for a disability discharge.
  • If your school falsely certified your eligibility requirements, or if they signed an application with your name and endorsed a check for you, you can qualify for a false certification discharge.

Seek Aid From Your Employer

Some companies offer their employees assistance in paying off student loans. It’s one of the best ways to get out of student loan debt.

Under the Consolidated Appropriations Act of December 2020, employers can offer student loan repayment as a tax-free employee benefit until December 2025.

If you’re working, find out if your employer offers this benefit. If you’re looking for a job, try to find one that offers it.

Increase Your Income Through a Side Hustle

Unfortunately, not everybody can get their student loan canceled or forgiven.

If you fail to get any aid or qualify for payment reductions, consider picking up a side job to keep up with your student debt repayment. Maybe some of your interests could turn into profitable hobbies.

Maximizing your income is always a good thing, and the faster you can pay off your debt, the less money you’ll waste on interest.

1. Will Student Loans Be Forgiven?

(Forbes)

The current administration started with grand promises for student borrowers.

President Biden himself spoke about federal loan forgiveness of a minimum of $10,000 per borrower. Many in Congress urged for an even bigger sum.

Experts say, however, it’s improbable that student loans will be forgiven, at least not in 2022.

Senators Elizabeth Warren and Chuck Schumer even asked for up to $50,000 to be forgiven per federal student loan borrower, stating this would “provide a massive stimulus” to the economy.

However, the promise of President Biden for student loan forgiveness still has to be genuinely addressed.

So, for now, student loans will not be forgiven.

2. How to Pay Off Student Loans

(Bankrate, Credible, Oval)

You didn’t find an easy way out, and now you’ve got to face the financial nightmare of paying off your student loans.

Does it have to be so difficult, though? Can you turn it into an easier, faster, and more forgiving process?

Of course, you can! Let’s check your options.

Make Bigger Payments

The best way to get out of student loan debt is to pay more than the minimum when you can afford it. You’ll cut through the principal balance faster, and you’ll pay less interest as you shorten your payback period.

According to the online student loan calculator from Bankrate, you’ll pay off the average $39,351 student loan in 10 years by paying $436 a month. But if you add to that $324, for a payment of $760 a month, you’ll pay it all off in half the time, saving a whopping $6,780 on interest rates!

A side gig of 2 or 3 hours a day could bring an additional sum to help you make those extra payments. It won’t be as quick as a Cares Act student loan forgiveness, but it’ll still make your life easier.

Set Up a Repayment Fund

If you have trouble budgeting or just want to keep things organized, you could open up a college repayment fund and funnel a set amount of money from each paycheck towards paying off your student loan.

Make sure your savings account is completely disconnected from your main bank account to avoid the temptation of splurging your savings on something else.

Also, try to get a high-yield savings account to help your money grow with time.

Come Up With a Budgeting Plan

By saving on food, housing, bills, and clothing, you can pay off your debt faster. This can also help you get by while you apply for student loan relief.

We suggest using this budget calculator to analyze your monthly expenses better.

Take Advantage of Discounts

If you’ve taken a private student loan, you may be eligible for some discounts.

Many lenders usually offer a 0.25 to 0.5% reduction on your debt if you set up automatic payments.

If you meet specific criteria, such as a set number of on-time payments or taking out another loan with the same lender, you may be able to save even more.

3. How to Get Out of Student Loan Debt Without Paying

(HuffPost, Givling)

We have already mentioned several methods to legally stop paying a student loan debt, and there’re a few more options that you could consider.

Seek LRAPs

LRAPs, or Loan Repayment Assistance Programs, are special student loan rehabilitation programs organized on a state level.

Depending on the state you live in, there’ll be different solutions and criteria that you must meet to apply. We suggest looking into it to see if an LRAP could help you.

Qualifying factors include being a teacher, living in a low-income area, or low pay.

Use this student LRAP finder tool, courtesy of Student Loan Hero, to understand your options more easily.

Try Out Givling

If you’re struggling with student debt, you may try out the mobile game Givling, available on iOS and Android. Granted, it’s not on the same level as federal student loan forgiveness, but it could be worth a shot.

You get two matches for free every 24 hours, and additional ones cost $0.50 each. The winning team receives a cash prize.

Join the Military

We’ve mentioned already that service members from all branches of the military can benefit from PSLF.

A similar option would be to volunteer for AmeriCorps or Peace Corps, which could also qualify you for loan forgiveness.

Consider Bankruptcy

You can eliminate student loan debt legally through bankruptcy. However, it can be an arduous and time-consuming process to do so.

To get rid of your student loan through bankruptcy, you have to pass the Brunner test.

You must prove that loan payments keep you from maintaining a minimal living standard, that you won’t be able to pay off your debt for a sizable portion of its payment term, and that you’ve at least tried in good faith to pay back the loan.

However, filing for bankruptcy will put your loan in default, which means it’ll be due then and there, in full.

The best course of action is to talk to a lawyer before taking such an important decision.

4. What Happens if You Don’t Pay Student Loans?

(Bankrate)

These are the consequences you’ll face in the short term if you stop repaying your student loan:

  • Making a late payment, even by one day, will label you as delinquent and will result in late fees
  • For federal loan borrowers, the state can withhold your tax refund until you catch up with your payments
  • You might see a chunk of your paycheck go directly to your lender, paying back your loan through wage garnishment

In the long term, however, things can get more serious.

  • Your credit score will fall drastically
  • Your lender might sue you
  • You will default
  • You will not qualify for any future financial aid

5. Do Student Loans Go Away After Seven Years?

(Tate Law)

Unfortunately, there’s no program or option for student loans to disappear after seven years.

If you see that your student debt has vanished, it might be in default, and you need to call your bank right away to ask about what’s happened and the actions you need to take.

Doing everything you can to pay back your loan, or get it forgiven or reduced, is the right approach.

6. Do Student Loans Get Forgiven After 25 Years?

(Federal Student Aid)

Getting your student loan forgiven after 20 or 25 years is an option with Stafford, Grad PLUS, and Consolidation federal loans. Under an IDR plan, after 20 or 25 years, depending on when you’ve taken your loan, any outstanding payments will be forgiven.

Conclusion

The harsh truth is that there’re no magical ways to make your student loan go away. But let’s hope the current administration follows up on its promise to help all graduates and undergraduates who struggle with student debts.

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