How to Balance Sallie Mae Student Loan Debt
Many prospective higher education students (borrowers) who applied for a federal loan received funding through the SLM Corporation--more commonly known as Sallie Mae--back in the mid 2000s. These borrowers typically now find themselves hundreds of thousands of dollars in debt after graduation, to the point that it seems that no relief is in site (remember, if you file for bankruptcy your student loans are not included in any sort of filing). But there are alternatives to making straight payments on a monthly basis.
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Things You'll Need
- Computer
- Word processing software
- Excel or another spreadsheet program
- Internet connection
- Pad of paper
- Pen
- Pencil
- Receipts
Instructions
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Repayment Plans
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Become familiar with HelpSaveMyDollars.com, compiled by financial guru Scott Gamm, who has been the subject of several interviews about debt consolidation on NBC's "Today Show" and MSNBC.com. Gamm, who was interviewed for this article, says, "As for consolidation, this is a great option, which usually saves you money long-term and allows you to combine all of your student loans into one. Again, contact the lender for more information."
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Understand that there are other payment options available to you other than consolidation. For instance, you can choose the standard repayment plan, which typically offers the lowest cost, or you can elect a lengthened repayment program in order to lower your monthly payment, Gamm says.
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"Choose a graduated repayment plan to pay your federal student loans," Gamm says. "This means that in the beginning of repayment, your monthly bills will be lower, but they will increase over the term of the loan on a monthly basis."
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Set up an affordable payment plan if you have Graduate Plus or Federal Stafford loans, through the "Income Based Repayment" option, which calls for monthly payments to be based not only on income, but also on the size of your family. According to Sallie Mae's website, federal student loan borrowers experiencing financial hardship can cap monthly payments at 15 percent of their discretionary income.
Deferment
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"Students and parents should note that deferment is not a permanent solution to your student loan debt--you still have to pay it off," Gamm says. "Deferment simply postpones payments for a certain period of time. Also, in most cases, student loans cannot be discharged in bankruptcy." Deferment, however, allows individuals to temporarily stop making payments to his or her student loan provider.
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Student loan deferments may be granted due to several reasons, such as unemployment, economic hardship, currently being enrolled in school (it should be noted, however, that going back to school in order to have your current loan payments deferred may result in increased debt, if you cannot pay for your classes out of your own pocket), being deployed in the military or having a current, working internship (either with a for-profit company or a nonprofit organization), according to Gramm.
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Gamm added that it is crucial to remember that any deferment agreement is a temporary solution, and not one that will not last for a long time. "You are still responsible, eventually and at some point, for repaying your student loan debt, even if you have been granted a temporary deferment," Gamm said.
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Tips & Warnings
Borrowers should contact their student loan lender for more information on the deferment policy of a specific loan.
"Sallie Mae continues to support reform that would allow federal and private student loans to be dischargeable in bankruptcy for those who have made a good-faith effort to repay their student loans over a five-to-seven year period and still experience financial difficulty," according to a company press release on June 4, 2010.
References
Resources
- Photo Credit student #2 image by Adam Borkowski from Fotolia.com
