Graduation is upon us! Many new college graduates will be confused about what to do if they are graduating with student loan debt. According to higher education and student loan expert Mark Kantrowitz, among the 70% of students who will graduate with student loans, the average amount of student loan debt for a 2016 graduate is $37,172. This is a daunting number and knowing your options after you graduate is critical to not falling behind on payments. View Dan Gamez’s appearance on Fox 5 San Diego for some quick tips for dealing with student loan debt after gradation!
A recent article in the New York Times states, “Seventy percent of student loan borrowers who are in default could have qualified for lower payments, according to a recent estimate from the government.” College graduates need to know their options before they default on their loans.
I met with a potential client last week. She has been so overwhelmed with her student loan debt that she has buried her head in the sand for years. She has no idea who she owes, how much she owes or how far into delinquency she is. How can you stay on top of your student loan debt? Here are 8 facts to know:
Tips For Dealing With Student Loan Debt After Graduation
- Know Your Loan – How much is your loan? How do you make payments? How much do you need to pay each month?
- Know Your Student Loan Repayment Options – Unfortunately, wages are not increasing at the same pace as student loan debt. There are repayment options that can make paying back your debt more feasible. These income-driven repayment plans allow you to pay a percentage of your monthly income rather than a fixed amount. How much you pay depends on how much you make. There are 4 kinds of income repayment plans
- Income-Based Repayment Plan (IBR Plan): Generally 10 percent of your discretionary income if you’re a new borroweron or after July 1, 2014, but never more than the 10-year Standard Repayment Plan amount. Generally 15 percent of your discretionary income if you’re not a new borrower on or after July 1, 2014, but never more than the 10-year Standard Repayment Plan amount
- The Income-Contingent Repayment Plan (ICR Plan): The lesser of the following: 20 percent of your discretionary income or what you would pay on a repayment plan with a fixed payment over the course of 12 years, adjusted according to your income
- The Pay-As-You-Earn Repayment Plan (PAYE Plan): Generally 10 percent of your discretionary income, but never more than the 10-year Standard Repayment Plan amount
- Revised-Pay As You Earn Plan (REPAYE Plan) – Generally 10 percent of your discretionary income
- Know Your Loan Servicer – It’s a good idea to have a good relationship with your loan servicer. If you find that you are about to fall behind on your loan, then call your loan servicer and let them know. Often times, the loan servicer will work with you.
- Know Your Grace Period – How long do you have after graduation before you need to start paying back your loan? Most loans offer a six-month deferment (grace period) after the date of your graduation before payments become due. You should also know if your loan offers the option to change your grace period.
- Know Your Options If You Can’t Find A Job – If you get out of school and don’t find a job immediately, then you may be eligible for forbearances and deferments.
- Know Your Monthly Income and Expenses – make a list of your monthly expenses including your student loan payment. Be sure to budget and make sure you can meet your expenses based on your monthly income amount.
- Know What Happens If You Can’t Pay Your Loan Back – If you can’t pay your student loan back, then your loan will go into default. If this happens, your credit score will take a hit -making it difficult to borrow money or open a credit card. If you do have a job, your wages could be garnished.
- Know There Is Help Out There! Graduating and starting off on your own is scary enough. If you need help figuring out your loans, then seek help. The Consumer Financial Protection Bureau (CFPB) is working on a “Payback Playbook” to help student loan borrowers understand their student loan repayment options based on the consumer’s individual circumstances.
The bottom line is that college graduates need to be informed. My client that buried her head in the sand for too long sought my help in gathering all the information about her student loan accounts. I will then help her determine what repayment options are available. Sure, she could do this on her own for free, but came to me because she felt more comfortable having a professional handle this on her behalf. It’s kind of like paying for a tax preparation service for your tax returns when you can prepare your own tax returns for free.
Student Loan Debt Help In San Diego
If this is confusing you or overwhelms you, contact our debt relief law firm for a FREE consultation. We are happy to walk you through the process.
Daniel R. Gamez, an attorney focusing exclusively in debt settlement, is licensed to practice in all state and federal courts in California and Texas. Mr. Gamez owns and operates the Gamez Law Firm in San Diego, CA. For more information, please contact Daniel Gamez at 858-217-5051, firstname.lastname@example.org or visit gamezlawfirm.com. Stay updated with the latest debt relief tips by following on Facebook and Twitter!