Image Credit: Loan Forgiveness, Discharge or the Other
Due to the rate at which American colleges are increasing their tuition fees, grads will continue to look for college loan relief programs to help manage their worsening financial situation. The main reason student loans were created was to give households on every range of the income-spectrum the chance to receive higher education; not so long ago a significant amount of jobs weren’t open to every applicant. However, with student loans, anyone can afford higher education through federal and private loans.
These loans gave opportunities to a large number of young adults. Life changed after graduation. Entering the workforce with a school degree implied a bigger yearly income. With more undergrads entering school, overhauls were expected to extend classrooms and grounds. The excess cost was invested in educational cost treks. The expansion in going to school has proceeded throughout the years with the cost current undergrads pay for school much higher than their forefathers. Increments in cost means an increase in debt and undergrads face overwhelming debt when contrasted with that of their parents.
When thinking about your student loan and the amount of debt your likely to incur take some time and analyze all your alternatives. Not paying is the worst choice you can make. Your government loan won't vanish. Truth be told, it can cause issues down the road for you as compensation garnishments or tax refund offset. Look for student debt relief programs that will truly help you get rid of your problems but one thing needs to be understood: that exercising different loan forgiveness or discharge options have different tax implications such as :-
- Loan forgiveness that requires you to work in a particular occupation such as Teacher Loan Forgiveness, Public Service Loan Forgiveness and other Job-specific programs is tax-free.
- Other types of student loan discharges are treated as taxable income and ultimately a potential tax liability, like getting your loans forgiven through an income-based repayment plan, student loan repayment assistance programs and student loan discharges for disability, death etc.
Consolidate your loan - Student Loan Consolidation
Student loan consolidation is the process of uniting some or all of your student loans into one new, all-encompassing loan. By consolidating, you would have only one student loan, with one monthly payment, interest rate, and term. People usually consolidate or refinance their student loans to lower and/or simplify their payments. So if you have a bundle of loans owing different lenders and institutions, you can repackage them as one.
Barney Whistance is an enthusiastic Finance and Economics blogger who is most interested in global economic climate. Apart from doing majors in Finance, he is also a Chartered Accountancy Student and planning to complete his Ph.D. in Finance before he turns 30. For more updates follow him on Twitter @barneywhistanc1