Student loans are one of the most widely held types of debt in the US. An estimated 44 million Americans owe more than $1.4 trillion in higher education debt. For some people with student loans, payments are problematic. The Brookings Institute estimates that 40 percent of student loan debtors will default by 2024.
If you are experiencing difficulty paying back your student loans, there may be measures you can take to avoid default. However, your options will vary depending on whether you have private or federal loans.
- Federal loans. You may be able to lower your payments on federal student loans by enrolling in an income-driven repayment program. These programs limit monthly payments to a percentage of your income. Income-driven programs include the Income-Based Repayment (IBR), Pay As Your Earn (PAYE), Revised Pay As You Earn (REPAYE) and Income-Contingent Repayment (ICR) programs. Eligibility for these programs can vary depending on the type of federal loans you carry. These programs may undergo changes (consolidation) in the near future. If you cannot make payments, then you may also qualify for an economic hardship deferment.
- Private loans. Unfortunately, there are no income-driven programs for private student loans. If you cannot pay back your private loans, you will have to ask your lender if you may qualify for lower payments. You should consider enrolling in an income-driven plan if you have both federal and private loans. Money saved from lower payments on your federal loans could be put towards paying off your private loans first. In addition, some private student loan lenders may allow you to temporarily pause payments.
We have published prior blogs on tips for paying off your student loans. There are other ways to save money on payments that today’s blog did not cover, so be sure to continue following our blog for future updates.
What If I Am Struggling to Pay Back Debts?
In many cases, people who are having difficulty paying back higher education debt are experiencing financial hardship for other reasons. If you are struggling to pay back other debts, then you should consider speaking with a bankruptcy attorney to explore options for relief.
The New Jersey bankruptcy attorneys at Garland & Mason, L.L.C could discuss which debt relief options are available for your situation.