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| How can I get out of student loan debt? |
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Last Updated
1st of May, 2009
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You will typically have a six-month grace period after graduating before you have to start making student loan payments. If you continue on to another academic program, you can get a loan deferment as long as you are at least a half-time student.
If you do not go right back to school, however, get ready to start making student loan payments each month. Treat your student loan payment(s) like any other bill that needs to be paid on time; after all, student loan debt does get reported on your credit reports. If you can consolidate your loans for a reasonable amount, it’s a good idea to do so because it will make your various loans easier to manage by lumping them together into one payment each month at an interest rate that you lock in for the life of the loan. Be careful when you consolidate, however: Reducing your monthly payment too much can increase the interest costs you’ll pay over the life of the loan. Paying a larger amount each month will help reduce your loan expenses.
Also keep in mind that there are opportunities out there for tuition reimbursement, loan deferment, and loan forgiveness:
While You’re In School (Undergraduate or Graduate): Tuition Reimbursement/Tuition Assistance
Some employers will give you tuition reimbursement while you are in school, especially if your degree is work-related. Even if such a program does not exist at your company, it doesn’t hurt to ask your boss or manager. Present the reasons why you think the company should support your educational endeavors. If you will be a greater asset to them by furthering your education, they may say yes!
There are a few caveats, however: First, most companies base the amount of assistance on the grade the students receives. Some companies withhold payment until the end of the semester. The company sometimes will not pay if the student receives a grade lower than a “B.” The company may also make payment conditional on performance or a commitment to work for a given time period. If the conditions are not met, the company may make the student foot the bill or deduct the bill from the final paycheck.
When You Graduate: Loan Forgiveness Programs
As you look for a career after college, keep in mind that there are many loan forgiveness programs that will pay off your student loans in exchange for your service:
AmeriCorps: 12 months of service gives you up to $7,400 in stipends plus $4,725 to be used towards your loan. Call 1-800-942-2677. Teach for America loan forgiveness falls under the AmeriCorps program.
Peace Corps: Volunteers are eligible for deferment of Stafford, Perkins, and Consolidation loans and partial cancellation of Perkins Loans (15 percent for each year of service, up to 70 percent total).
Volunteer in Service to America (VISTA): For 1700 hours of service, you’ll get $4,725 to go towards your student loans. Call 1-800-942-2677 or 1-202-606-5000.
Military Service: Students in the Army National Guard are eligible for the Student Loan Repayment Program, offering up to $10,000 in student loan forgiveness. (Also keep in mind that military and veterans' associations provide many scholarships and tuition assistance programs).
Teaching: Students who decide to teach full-time in elementary or secondary schools serving students from low-income families are eligible to have a portion of their Perkins Loan forgiven under The National Defense Education Act. This program forgives 15 percent of your loan for the first and second years of teaching service, 20 percent for the third and fourth, and 30 percent for the fifth. Many state and local teaching programs also offer loan forgiveness, as does Teach for America. The American Federation of Teachers has a list of programs that offer loan forgiveness.
Medical and Legal Programs: Many law schools have loan forgiveness programs for students who graduate and work in non-profit or pubic interest positions. There are similar loan forgiveness programs for doctors and nurses who work in areas with poor medical care, such as in rural or economically disadvantaged areas.
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