Student loans are the largest source of debt for American households. An average student graduates with a $25,000.00 loan balance and for many people, one of the several factors that lead to a bankruptcy filing is being unable to pay for student loans. Student loans are often a necessity for someone seeking to obtain his or her higher education, but many new students don’t understand what they’re getting into when they sign up for one.
In looking for student loans, shop around for the best interest rate. Always choose fixed interest rates versus variable interest rates. Choose a subsidized loan over unsubsidized loans. Most student loans don’t begin the repayment plan until after graduations, start paying your interest while in school. There are other options to help you make your payments affordable like extending your payments, deferring your payments or entering into forbearance. You should contact your loan provided and discuss their options, you may qualify for an Income-Based repayment plan where payments are adjusted based on how much you earn. If income-based is not a viable option you can apply for the a Graduated Plan where monthly payments begin low and then incrementally increase every two years, typically no more than ten years
You may have heard of the terms deferment and forbearance. These are two entirely separate things that allow students to postpone or reduce loan payments, potentially helping them avoid defaulting. Forbearance allows a student to pause or reduce payments for up to a year, but interest will continue to accrue in the meantime. Deferment involves postponing the repayment of the principal and interest of a loan due to factors like unemployment.
Lastly, remember that the sooner you’re able to pay off your student loan, the less you’ll pay over the course of a loan, if your financial situation allows for it. If you’re struggling with debts like student loans or credit cards, contact a legal professional to discuss your options.
This update is provided by Miami bankruptcy lawyer Alonso, Perez & Santos, LLP. Our areas of practice include bankruptcy, debt harassment, credit card defense, foreclosure defense, immigration law, insurance litigation, business start-ups, and more. Call 305-676-7545 to speak with a Miami insurance attorney and receive a free consultation. We look forward to working with you.
This information is provided for educational or informational purposes only and should not be construed as legal advice. The information is not provided in the course of an attorney-client relationship and is not intended to substitute for legal advice.