Is your kid heading towards the college this year? Then you have to prepare yourself to face the large tuition fees and bunch of interest on different student loans. In the present day economy, student loan debts have a large upsurge compared to other kinds of debts.
According to the report of the National Association of Student Financial Aid Administrators, they say that even if the student indulges in huge student loan debt, there are numerous easy ways to tackle them.
Another report from NASFFA said that when a student leaves the college after their degree course, they have a manageable debt of $26,500. This figure does not contain the amount, which the parents borrow.
A student loan is actually worse than it seems. So check out these 5 notable ways to handle the student loan debt tactfully.
For the eligible student the Federal government should make the Income-Based Repayment program automatically. This program helps the borrowers to pay 5% or less than their discretionary income and automatically receive loan forgiveness after 25 years.
A person, who is eligible, should utilize the Income-Based Repayment program, to reduce their student loan defaults. 37 million borrowers are having student debts and 1.1 million has enrolled in this program.
- Stable and Predictable Student Loan Interest Rates
The federal government should make provisions that loan interest rates must vary from year to year. The rate should vary as the student takes out a loan and then fixed the rate for the life of the loan. The current system of the Congress considers the economic conditions at the time of borrowing.
- Setting Loan Limits for the Borrowers
It is not possible for the school to stop their students from overborrowing. There was a time when the federal government has stopped the school from additional counseling or documentation before approving a student loan. There are instances, which show that students go on borrowing for years until they crossed the limit meant for acquiring the bachelor’s degree.
- Consider and Reexamine the Parent Loan Eligibility
Parents are eligible to borrow from the Parent PLUS Loan program, even if they do not have the ability to pay back the loan. If parents are able to maintain a good credit history, they can borrow the college fee, even in the absence of financial wherewithal. Federal government evaluates the parental ability to repay the loan using a debt-to-income ratio.
- Having an Universal Loan Portal for the Students
Students can easily seek information from the federal portal. They can gather information on all types of loans – federal, private and institutional. Since having all the loans in a single place will be of great use to the borrowers.
Therefore, if your kid is heading towards the college this year, then you do not need to worry about the burden of debts. Besides earning the degree, they can clear of the dues by themselves and with little hassle. The rules and programs under the federal government will give them the ease on clearing the dues they have.
Author’s Bio: Aalina Jones is a financial expert and a part time consultant to major B2B appointment setting companies. She helps the company with various financial issues and to invest in better planning and deposits.