Research shows that student loans and debts have increased to the level of state debt. As students face hardship in handling these loans in time. Demanding a student debt management plan that can help them pay off their loan as soon as possible. The traditional piece of advice about debt management includes making a budget plan, restricting expenses, reviewing the grace period, and paying off the debts with high interest first, etc.
In contrast to these traditional pieces of advice, we are here with some out-of-the-box ways to tackle student debt. If you are a student and are looking for unique ways to handle your educational debt then this article is for you.
It is also important to state that students who are not financially capable to enroll into an institution are advised to look out for available scholarship opportunities since scholarship funding can help students not to get into debt while studying.
Keep reading to know all about these plans.
Table of Contents
3 Tips To Student Debt Management For Burden-free Education
1. Debt Consolidation
Consolidation debt is an act of taking a single loan to pay the multiple loans lingering over your head. This loan comes with easy pay-off terms, less interest rates, and lower monthly installments. Bring all the installments into a single one.
If you are a student with a good image of paying your installments in time or a person with a good credit score, applying for debt consolidation is easy for you.
Being a student who doesn’t have any property in his name, you can go for unsecured debt consolidation. A way to handle your debt smartly.
2. Declare Bankruptcy
Declaring bankruptcy is another effective way of discharging student debt. This means you don’t have the means to pay off your loan. Proving which makes your loan default.
However, this option is availed mostly when students are out of any other alternative like federal student loans, etc. If not then it can be quite challenging for you to prove bankruptcy. Proving yourself to be in a sudden financial crisis is also called undue hardship.
Other challenges related to this debt management plan are going through tough financial tests like the Brunner test and collecting evidence. Moreover, even after you avail of one, your financial history will be disturbed.
Therefore, bankruptcy and student debt should not come together until you have already availed all the alternative methods to pay off student loans.
3. Defer Payments
Deferment is another effective solution to student debt. If you are unemployed then you can ask your lender to defer the payment for you.
They will relieve you by granting you a deferment period, a period during which you will not have to pay interest or repay the principal on the loan.
In case You have taken a federal loan, your interests will be paid by the federal government. Freeing you from the burden of a loan to a larger extent.
The deferment period set by a contract between the two parties varies from person to person. For students, it is mostly between one to three years. Thus, an effective way to lighten student debt to much extent.
Students are the backbone of a country, the government needs to make them burden-free by making easy policies to allow them to tackle their student loans in time.
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