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Question By
GECOBIE

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Is there any advice available when it comes to the handling of student loans?

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Yes, work with whatever company is servicing them and find out the best way to get the loans paid in a manner that will work best for all concerned.  But those loans HAVE to be paid.  That is something the student loan industry got guaranteed for them some years ago.  Find out all options to determine what will work best.

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Are you still in school? Or are you in repayment? Do you have federal student loans? private student loans? or a mixture of both?

If you have multiple student loans from different lenders and servicers, it may be convenient to get a consolidation loan. A consolidation loan will take a weighted average of your interest rates and give you a new interest rate which may (or may not) be lower rate than what you're currently paying. There are student loan consolidation sites that let you play around with a calculator to determine if consolidation is the right thing for you.

Otherwise, make sure you make on-time payments for your loans and avoid going into default. A defaulted student loan will wreak havoc on your credit, and will prevent you from borrowing student loans in the future (if you go back to school). With federal loans, there are many different types of repayment options. Do some research on the best option for you.

Vist studentaid (dot) gov for some awesome information on how to handle your loans.

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A fellow student loan borrower

I disagree with consolidation. It may "make one payment easier" but it hurts your overall spending if you plan to pay more than the minimum.

If your loan allows you to pay more than just the interest every month, I highly suggest doing so. If you pay as much as you can off of the loan with the highest interest rate while paying the expected payment on all the others, you'll knock money off of the principal amount and that'll lower the overall cost of the loan to you.

IF you are struggling with paying for a student loan, the Federal Loans allow for a hardship forbearance (3 months or so) which you should definitely take up. A forbearance in simple terms means that those three months will be forgiven, but will be added to the end of your loan life (or split evenly among the payments for the rest of the loan). 

Private lenders in my experience, for example Sallie Mae, typically do deferment, meaning the loan payments are witheld for that period of time, but the total amount due upon the first bill is those months missed plus the current month.

These options can prevent a credit score hit (wish I knew about it two years ago..).

Also, you may qualify for an IBR (Income Repayment Plan) with the Federal Student Loans. This is based off of your discretionary income, which is your total income minus the poverty line. 

    -- So if you make $30k this year, your discretionary income (I AM ROUNDING) is going to be $30000 - $11000 = $19000.

        -- If your loan is before 7/1/2014, you will pay around 15% of that result. If it is after 7/1/2014, you will pay around 10%.

Upon income repayment, if your loan is not paid within 10 years but you have met the payments of the plan, you will be forgiven of the remaining balance of the loan without any affect on your credit.

SOURCE: I am a student loan borrower with $26k still of debt, with a current and "Pays as Agreed" status on all my loans which were once in the default process because I couldn't pay.

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Reply by
Vincenzzzo

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I need to correct myself, it is currently 20 years not 10. However, there is a bill in Congress right now that would impose a 10 year rule.

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