If you’re struggling with student debt, you’re not alone, and there are ways you can get help.
Over 60% of college graduates leave school with loans, with an average debt of about $30,000 due to the high cost of education. And your debt can climb significantly higher if you attended a private institution or graduate school.
The monthly payments associated with such a high debt load can take a big toll on your finances. If your income isn’t very high, you might find yourself living paycheck to paycheck, or worse, falling behind on payments.
And even if you do make a good income, you still might find yourself delaying some of your big goals, like buying a house, saving for retirement, or having children, due to the burden of your loan payments on your finances.
If you find yourself in one of these situations, here are four ways you can get some much-needed help.
1. Look for alternative repayment plan options
If you have federal student loans, the government has an array of income-based repayment plans available that might significantly reduce your payment to a more manageable level. The newest and perhaps best plan for most borrowers is the SAVE plan.
The SAVE plan caps your monthly payment based on your income and other factors like how many children you have. If your income is low enough, you might not even have to make a payment at all. The Department of Education has a loan simulator to help you see if one of these plans might be right for you.
After paying reduced SAVE payments for a period of time, the remainder of your loan balance will be forgiven. Depending on your initial loan balance, this could be anywhere from 10 to 20 years, or up to 25 years if you got a graduate degree.
On the other hand, if you have private student loans, it’s unlikely that your lender (typically a bank, credit union, or online lender) offers alternative payment plans, but contact them to find out. Most lenders do offer temporary hardship assistance if you have, for example, lost your employment.
Another option if you have private loans is student loan refinancing, which essentially lets you pick a new payment plan with a new private lender who pays off your old loans and creates a new one.
If you refinance to a longer term such as 15 or 20 years, it could reduce your monthly payment significantly – but you may pay more interest over the life of your loan.
2. Get help from family & friends through The Aunt Betty Fund
Many people don’t talk about their student debt, even with their family. And even if your family knows you have student loans, they may not know what a burden it is on your finances.
Through The Aunt Betty Fund’s secure nonprofit platform, you can start a loan paydown campaign and invite family and friends to contribute. You may have an aunt, uncle, or grandparent who would love to help you work towards your goal, if they only knew you needed the assistance.
It can be hard to ask for help, but sending an invitation to your campaign through Aunt Betty could make it easier and start the conversation. Your family & friends can send monthly contributions, or they can send a one-time gift if they prefer.
It’s a similar concept to other crowdfunding platforms, except that the funds your contributors send will go straight to your loan servicer and directly pay down your debt. The Aunt Betty Fund also verifies your loan status, which can give your contributors peace of mind.
If you’re reading this and you are a family member or friend of someone you want to help with their loans, you can register and invite them to start a campaign.
3. Apply for a grant from Aunt Betty
The Aunt Betty Fund also offers an array of unique grant programs that send a payment to your loan servicer on a monthly basis for a set period of time.
Aunt Betty’s grant programs are designed to help people with a demonstrated financial need, for example, a high amount of debt relative to their income level.
In addition to more general grants, there are grants specifically for public school teachers as well as grants for current students. More grant programs are also planned for the future.
To apply, simply register, fill out your profile, and start an application. To complete your application, be aware that you will need to write a personal statement and upload a few documents to verify your information, such as a photo ID, loan statement, and tax documents.
4. Apply for deferment or forbearance
If you can’t make your payments at all, you may be eligible for forbearance, whether you have private or federal loans.
When you go on forbearance or deferment, you won’t have to make payments on a temporary basis. However, your loans will still accrue interest during this period, unless you are deferring certain types of federal loans such as subsidized loans.
For private student loans, most lenders offer some kind of temporary relief to borrowers under financial hardship. Many lenders offer up to 12 months of forbearance.
Federal deferment and forbearance options are generally more lenient than private lender options in terms of eligibility. To learn more about how to apply, visit the Department of Education website to see your options, or contact your loan servicer.
Finding a path forward
While your student loans may not go away anytime soon, the options we’ve discussed above could provide some much-needed relief and give you a path to more easily coexist with your debt.
You should also look at the basics – make a budget and take a hard look at your accounts to see how you are spending your money. It’s possible there are expenses you’ve overlooked or small sacrifices you could make to free up some extra money each month. And if you’re looking for some extra inspiration, check out our blog about a schoolteacher who paid off $40k in loans in 18 months. While not everyone will be willing or able to go to all the extremes he did to pay off his debt, it may give you some ideas.
