Help With Paying My College Debt
If you have crushing college debt, you aren't alone: College seniors typically owe tens of thousands of dollars in student loan debt. Paying off your student loan can seem like an insurmountable problem, but there is help. Several government and private programs can reduce, or even forgive, your debt.
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Seek Forgiveness
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If you are interested in a public service career, you may be able to get some or all of your college loans forgiven. For example, if you are willing to serve in a low-income public school for two years, you can get a grant for $4,725 per year to pay down your loans. Similar programs are in place for doctors and nurses who are willing to work in communities where there are not enough medical practitioners.
Income Based Repayment
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Income-based repayment is a way for you to make affordable payments each month. As long as your student loan debt is high relative to your family size and income, you may be eligible for the program. If you make payments for 25 years, the rest of your loan will be canceled. This is a significant benefit if you have a high five- or six-figure loans or if you have a low income and are unable to afford payments.
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Claim the Interest on Your Taxes
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You may be able to deduct as much as $2,500 of your loan interest on your federal taxes. Use the money you save on your taxes towards your repayments for the following year. You are eligible to take the student loan interest deduction if you earn less than $50,000 per year if you are a single filer or $105,000 per year if you file a joint return with your spouse.
Defer Your Loan Repayments
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If you are struggling to make loan repayments, consider taking a timeout and requesting a forbearance. If you have subsidized federal loans, the federal government will even pay your loan interest while you are in forbearance.
Warning
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If you are considering a loan consolidation to lower your monthly payments, look into your options carefully. Consolidating student loans may make you ineligible for the Income Based Repayment plan or government loan-reducing programs. Talk with your service provider about the possible consequences of any payment-lowering program.
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