An estimated 44.2 million college graduates are living with student debt in America, Forbes reported.
The average amount of student debt has risen to $37,172, BankRate reported.
Despite the average, real rates of debt vary a lot, and more than 415,000 student borrowers have upwards of $200,000 in student loan debt, Forbes reported.
The total amount of student debt in the United States is close to $1.4 trillion, according to Forbes.
The so-called standard repayment plan for federal student loans is ten years, but in reality, it will take the average student borrower 21 years to pay off the student loans taken out to earn a bachelor’s degree, according to U.S. News & World Report.
Student debt is such a lingering problem that even by the time they reach their 30s, student borrowers still owe an average of $34,033, CNBC reported.
The interest that you pay on student debt is calculated based on a simple daily interest formula that multiplies the balance of your student loan times the number of days since your last payment times your interest rate, Federal Student Aid reported.
Congress is responsible for determining the interest rates for student loans through federal legislation, according to Federal Student Aid.
Federal loans typically have much better interest rates than loans from private banks and credit unions, which are often variable and can rise as high as 18 percent, Federal Student Aid reported.
Direct Loans from the Department of Education can be subsidized, in which you don’t have to pay interest while you are a full-time student, or unsubsidized loans, in which that interest accrues even while you are in school, Federal Student Aid reported.
In the case of subsidized loans, the federal government covers the cost of interest accrued on your loans while you are a student and for the duration of the grace period between when you leave school and when you must begin repaying your loans, according to Federal Student Aid.
If you don’t pay the interest on your student loans, it turns into compound interest or capitalized – interest charged on top of interest, which can result in a significant increase to your loan balance and make paying off your loans take “much longer” than expected, MarketWatch reported.
The interest you pay on your federal student loans can actually lessen your income tax burden, because in many cases, that money is tax-deductible, according to the Internal Revenue Service.
To qualify for federal student loans, work-study opportunities, and even private scholarships, you need to fill out a form called the Free Application for Federal Student Aid (FAFSA), Federal Student Aid reported.
Filling out the FAFSA takes just 25 minutes on average and can be submitted online or by mail for your convenience, according to Federal Student Aid.
When you fill out the FAFSA matters, especially since, according to TIME Magazine, the following states award aid on a first-come, first-served basis: Alaska, Illinois, Kentucky, North Carolina, Oregon, South Carolina, Vermont and Washington.
As the name suggests, the FAFSA doesn’t cost anything to fill out – although some websites not affiliated with the Department of Education try to trick students and their families into paying for help. If you actually need assistance filling out the FAFSA, you can get it for free from FAFSA.gov.
Unless you are married, going to graduate school, serving in the armed forces, supporting children of your own or at least 24 years old, the federal government considers you a dependent student – regardless of your living situation, your financial situation or your employment, according to Federal Student Aid.
If you’re a dependent student, then you need your parents’ identification and financial information to fill out the FAFSA – even if you’re the one paying for your education, Federal Student Aid reported.
Even if you don’t live with your parents, you must report their financial information on your FAFSA unless you qualify as an independent student or the person you live with has legally adopted you, according to Federal Student Aid.
Your parents don’t have to be citizens of the United States in order for you to fill out the FAFSA and receive financial aid toward your education – in fact, the form doesn’t even ask about citizenship status, Federal Student Aid reported.
You can still get federal financial aid even if you’re not a U.S. citizen, if you are considered a U.S. national, a permanent resident, a refugee, or meet certain other guidelines, according to Federal Student Aid.
Unlike private loans, most federal student loans don’t require the borrower to undergo a credit check or supply a cosigner, though you may need an established credit history to qualify for a Direct PLUS Loan, Federal Student Aid reported.
Undergraduate students can borrow up to $5,500 per year in Perkins Loans or $5,500 to $12,500 per year in Direct Subsidized Loans and Direct Unsubsidized Loans from the federal government to earn their associate’s or bachelor’s degrees, although the exact amount you can receive depends on your family’s financial circumstances and the cost of your education, Federal Student Aid reported.
Graduate students can borrow the full cost of their education, including up to $8,000 each year in Perkins Loans, up to $20,500 each year in Direct Unsubsidized Loans and whatever amount of Direct PLUS Loans they qualify for based on a credit check, according to Federal Student Aid.
Parents can take out Direct PLUS Loans for their children’s education through the Department of Education, but they need a clean credit history to do so and can only borrow the remaining cost of attendance after subtracting other financial aid received, Federal Student Aid reported.
You don’t have to begin repaying your federal student loans until after you stop being a full-time student and your grace period – typically, six months from the time you leave school – ends, according to Federal Student Aid.
Making an optional payment on your student loans during your grace period can reduce the overall balance of your student loan, which in turn decreases the interest that will soon start accumulating on your loan – saving you money in the long run, according to U.S. News & World Report.
Students who borrow federal funds can choose from eight different repayment plan options, including extended plans that allow you to make smaller payments over a longer span of time and income-based plans that factor how much you earn into your monthly payments, according to Federal Student Aid.
Don’t worry if your financial situation changes, because you are allowed to switch repayment plans at any time for free, Federal Student Aid reported.
Paying as little as $20 more on your loans each month can make a big difference – shaving close to two years of payments and $1,000 off of a $10,000 loan on a 10-year repayment plan, loan servicer Sallie Mae reported.
Instead of making out your student loan payments to the Department of Education itself, you will be assigned a loan servicer, a third-party company that handles billing and loan repayment services, according to Federal Student Aid.
You may have several different loans through the Department of Education if you were offered multiple types of federal student loans or if you took out loans for each year of your education – and those loans could have different servicers, Federal Student Aid reported.
There are two situations in which you might qualify for student loan forgiveness, according to Federal Student Aid: employment in a public service job or working in public education.
Teachers can apply for student loan forgiveness if they have not defaulted on their student loans and they teach full-time for five complete and consecutive years in designated elementary and secondary schools that serve low-income communities, Federal Student Aid reported.
Working for a federal, state or local government entity or a not-for-profit public services organization, or volunteering full-time for AmeriCorps or the Peace Corps, can also qualify you for student loan forgiveness after 10 years, according to Federal Student Aid.
Consolidating multiple student loans into one loan can help you simplify and stretch out your loan repayment, but it can also disqualify you from certain benefits and cause you to pay more money in the long run, according to Federal Student Aid.
You might receive phone calls or mailings about companies that promise to help you consolidate your student loans for a cost – but you actually can do this for free by applying for a Direct Consolidation Loan through StudentLoans.gov.
Only three events can result in your student loans being discharged, meaning that you are released from your duty to repay them: your school closing during your enrollment as a student there, suffering a “total and permanent disability” or your own death. Otherwise, you’re going to have to pay back your debt, according to Federal Student Aid.
In one study of former college students, 23 percent of students reported being unable to make their student loan payments, according to U.S. News & World Report.
The day after your first missed student loan payment, your loan is considered delinquent, while it isn’t considered to be in default unless you have gone 270 days without making a payment, Federal Student Aid reported.
Around 11.2 percent of college graduates default or go into delinquency on their student loans, Forbes reported.
Unlike other types of debt, student loans can’t be removed through bankruptcy unless you’re able to prove that repaying your loans would create an “undue hardship,” which means your student debt will stay with you until it’s paid off in full, Federal Student Aid reported.
If you lose your job and become unable to make payments on your student loans, switching to an income-driven plan while unemployed can reduce your payments to as little as zero dollars, preventing you from defaulting on your loans, according to U.S. News & World Report.
To avoid your loan becoming delinquent or going into default, you can apply for forbearance or deferment, which essentially lets you postpone making student loan payments for a specified period of time, though your loans may or may not continue accruing interest, Federal Student Aid reported.
Some studies show that as many as 43 percent of students had deferred their student loans, according to U.S. News & World Report.
If you default on your student loans, the federal government has the right to begin Administrative Wage Garnishment, in which it can force your employer to take money – up to 15 percent of your earnings – directly out of your paycheck to apply toward your unpaid student debt, Federal Student Aid reported.
The federal government has the right to withhold a portion of your income tax refund if you allow your student loans to go into default – and withholding these tax refunds currently accounts for 90 percent of the federal government’s collections efforts, the United States Government Accountability Office reported.
Close to 36,000 Americans ages 65 and older lost a portion of their Social Security benefits due to unpaid student loan debt, proving that even once you’ve retired, you can still be on the hook for the cost of your education, according to the United States Government Accountability Office.
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Through student loan refinancing, borrowers can refinance high-interest student loan debt and potentially score a lower rate, saving thousands of dollars in interest over time. Those savings can then go toward extra payments to get out of debt even faster. Additionally, borrowers can select a longer term to obtain a lower monthly payment as well.