According to latest reports, a staggering 6.8 million federal student loan borrowers have failed to repay their loans. Specifically, the cohort default rate for borrowers whose first loan repayments came due in the 12 month period starting with October 2012, went up to 9.1 percent from 7.0 percent. In fiscal year 2013, students borrowed approximately $106 billion through federal loan programs.This is reflective of the fact that something is wrong with the way student loans are procured in the US. With cost of education going up and there being no alternative to taking education loans, it is imperative for loan aspirers to know the right way of seeking education loans.
Pick the right plan
Never seek loans that would translate into biting more than you can chew. Never assume your starting salary to be good enough to meet your loan installments. No matter how good your prospects are opt for the income-based repayment plan. As per this plan, you need to pay 15 percent of your annual income towards meeting the loan and after the 25th year the remaining loan amount is exonerated. Here are the few suggestion to get out of student loan debt faster?
Don’t opt for stalling payments
If you are eligible for postponing the payments don’t ever consider it as an option. And that’s because deferment invites interest which soon spins out of control. It is this extra charge which gets unmanageable. If a vast number of students have not been able to make payments then it is primarily because of the accrued interest which has nearly doubled the amount they own.
Paying each month
Make sure there is no outstanding monthly wise. As the saying goes small drops of water make an ocean, monthly defaults can accrue into a huge amount. So be punctual with your monthly payments to get over the loan soon. The longer the repayment period is, the more money will be added to your outstanding and so it is better to pay off as much as you can from the first month onward’s.
Don’t entertain the bankruptcy theory
This thought has undone many borrowers. If you go bankrupt it doesn’t mean you owe nothing to the state. This is because, unless you prove to the court that you are in no position to pay the loan, your debt would be yours. Banking on the bankruptcy escape route is not that easy and can backfire in most of the cases.