While students who come from high and middle income families are fairly comfortable and familiar with student loans and the opportunities enmeshed within loan culture in general, lower income families tend to be more hesitant. Financial aid advisers have found many lower income families are so put off by the high tuition at some schools that they don’t even want their kids to apply. With the pervasive nature of student debt and the problems it causes for so many, there is certainly more than a little wisdom in this view point. However, in this society, lacking a college education severely limits opportunity. With rising tuition costs throughout the higher education system, this could also lead to more and more schools taking on an off-limit status for lower income students. Fortunately, there are considerable efforts underway to stem the tide.
Image source: Lafayette College
A lot of schools have begun to offer financial aid packages to lower income students that don’t even include loans. Which is great because a lot of lower income households hear “loan” and immediately head for the door. Generally speaking, schools define low income as families who bring in less than $40,000 a year, who meet the requirements for Pell Grant eligibility, or are below 200% of the poverty line. Schools that have cut loans from these financial aid packages are often referred to as ‘free-tuition’ schools. In lieu of student loans, some of these schools have substituted grant opportunities and options like work study assignments.
Image source: Gates Foundation
Another huge way to avert problematic debt isn’t to avoid getting loans in the first place, but instead make sure to take advantage to the government’s more generous loan repayment programs. Options like Income-Based Repayment are perfect for low-income students; it’s important when procuring loans to be sure they are federal direct loans, which are eligible for Income-Based Repayment. This repayment plan allows for incredibly low monthly payments that are derived from the individual’s income and then offers loan forgiveness after 25 years.
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With so many ways to keep student loans at a manageable level or even avert them entirely, there’s nothing keeping smart, capable students out of great schools. Significantly, some of first schools to offer alternatives to high student loans, options like no loans, loan caps, no parental contributions and Pell grant matches, are members of the Ivy League. Princeton and Yale, for instance, have both seen significant increases of enrolled lower income students as a direct result of these efforts. Organizing student finances is a complicated and stressful business, but there are groups that can help students optimize their debt and stop student loans from feeling unmanageable. The human capacity for creativity is enormous. Looking at the world around us, we see the work of great minds everywhere. When this great gift of our creative capacity is combined with the technology available to us today and excellent training, anything is possible. Around us we find awe inspiring feats of engineering and architecture, moving work created by the entertainment industry, brilliant discoveries in the scientific world. With a college education there is no feat of human invention that can’t be achieved when we enable young people to grow and realize their dreams.
After the recent financial upheaval, the cost of education has been rising so high that it’s almost impossible for families to manage the excessive costs. In such situations, more and more individuals are taking out student loans to pay for tuition fees, but when the time comes to pay the loans back, they default on the debt. Defaulting on student loans is not at all desirable since it affects the credit score as well as credit history. There are many ways to eradicate the defaulted student loan debt.
One option is debt consolidation. So seek debt consolidation help from a company and pay off the defaulted student loan debt fast. Aside from this, there are some other repayment alternatives available to help you pay off your existing defaulted debt. So let us take a look at how you can take advantage of those repayment options.
• Make sure you have a concrete financial plan in mind. If your loan is in a good credit standing or if you have not gone into the repayment period yet, then it would be ideal for you to decide on student loan repayment options.
• When you look for a repayment option, make sure you look for one that reflects your fiscal situation. You may also have a combination of circumstances, so once you contact an advisor ask them about the best options available for getting out of default. However, when you discuss repayment options, make sure they have comprehensive knowledge and can assist you with a repayment plan that suits your individual needs.
Suppose you have low income and high student loans, ask for the Income Based Repayment (IBR) program. Like the IBR, there are many other programs especially designed for your unique financial situation.
• In many cases, people have more than one defaulted student loans because the loans get sold and transferred to different credit collection agencies. So find out the number of defaulted student loans you have as well as the kind of loans. For example, you may have a defaulted student loan worth of $10,000 which actually is a total sum of one to five different student loans.
Along with the sum and the type of defaulted student loans owed, you also need to determine the status of all your student loans and the holder of the loans. Do not assume that since one collection agency is contacting you, you have only one defaulted loan. Visit the website of National Student Loan Data System (NSLDS) and find out all the student loans owed.
• Once you default on your loan the total balance on the debt immediately becomes due, resulting in the garnishing of wages and tax returns. So unless you have enough money to pay the loan back, your repayment process will be long and hard.
Conduct research on the above mentioned options and other available alternatives to find the right student loan repayment plan for you.
