Options for Unemployed Graduates with Student Loan Debt
The rising unemployment in the U.S. is a grim reminder that those of us with jobs should stop complaining and start being thankful. Unfortunately, one of the real classes of people who are being undeservedly punished by our economic struggles are college graduates. With unemployment climbing, college grads are finding themselves trying to beat out job applicants with a bigger work histories under their belt. Without a solid job, graduates are finding it difficult to make their student loan payments that become due upon receiving a diploma. What are their options?
Talk to Lender. Just like with those having trouble with their mortgages, immediately calling your lender and explaining your situation can pay off. Your options may vary depending on the lender and the type of loan (federal or private).
Income-Contingent Repayment. Generally, opting for an income-contingent repayment plan will lower your monthly bill. The bank will decrease your monthly payment depending upon your gross income.
Deferment. If you defer your loans, they will temporarily be suspended and will not be due on a monthly basis. In order to qualify for deferment, you must have some type of economic hardship, which would include unemployment. The problem with deferment is that although it provides immediate relief, the interest on the loans continues to grow. Although, if the loan is a subsidized federal loan then you do not have to pay interest while in deferment.
Forbearance. You can specify a certain amount of time where you will stop making payments on your student loans, however, during this time, interest will continue to accumulate.
Extended Repayment. This option allows the borrower to extend the length of the loan, which in turn would reduce your monthly amount due. Generally, this option requires that you consolidate (group all of your loans into one) and will cost you more in the long term because of accruing interest. If you have to opt for this repayment plan right away, try not to get used to your low payments. Once you can afford to do so, pay more each month to reduce the length of the loan and reduce your total repayment.
Live Frugally. Although there are options to help cash strapped graduates pay their expensive student loans back, the best way is to simply cut back your spending and make your minimum payments. This option may not be available to everyone, but the most graduates can likely spot areas in their life where money is being spent foolishly and use that towards their loans. Remember, for graduates, you have nowhere to go but up. This is the likely the time in your life where you will make the least amount of money. Use this time to understand the power of saving and living frugal, it will only help you in your years to come.
For more information on how to afford your student loan bills, visit http://www.ibrinfo.org.
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