Do you owe thousands of dollars in student loans, or have you thought about taking out a student loan to fund your college education? Whether you’re currently repaying student loan debt or you’re contemplating a student loan, the following are some little-known student loan facts that can be helpful to know:
You can lower or even eliminate some of your payments
If you fall into a certain income bracket, you may be able to qualify for an income-based repayment plan that lowers your monthly payments, or you might even be able to have some of your debt forgiven. One plan, Pay As You Earn, can allow eligible debtors to contribute 10 percent of their discretionary earnings towards their student loan debt over a 20-year period, after which any leftover debt is discharged.
Student loan debt discharge is possible without declaring bankruptcy
In fact, declaring bankruptcy often won’t allow the filer to discharge student loan debt. To do so, a debtor would need to prove that he or she is incapable of earning of a living and therefore cannot repay the student loan debt. However, if you are a disabled veteran or you have been recognized as a disabled individual through Social Security, you may qualify for student loan debt discharge—regardless of whether or not you have also filed for bankruptcy.
Automatic debit can save you money
If you have federal student loans, you may qualify for a 0.25 percentage reduction in your interest rate just by enrolling in an automatic debit program.
You can extend your federal loan repayment period
Here’s another one for those who have taken out a federal student loan: you may be able to select an extended repayment plan if your debt is $30,000 or more. Because this can help to lower your monthly payments, it can be beneficial to those who are struggling to make timely student loan payments each month. But you should only extend your loan as a last resort, as it means you’ll have to worry about your student loan payments for many more years.
Your town might help pay off your student loan
More rural counties and towns throughout the United States are offering financial assistance for college graduates by helping them with their student loan debt. If you live in a small town, find out if they participate. Or, if you’ve been thinking about making a move anyway, you might want to consider one of the towns that offer this type of financial assistance as an incentive. Many communities in Kansas are already on board, with others throughout the country beginning to follow suit.