Learn how to manage student loan debt

By Kevin Theissen
Skygate Financial Group LLC 

Unfortunately, the “hair of the dog” won’t cure this headache, but here are some ideas for managing your student loan debt.

Income-Based Repayment Programs — Under one income-based repayment program, your outstanding loan balance may be forgiven after 25 years of qualifying repayment. You would need meet certain income requirements.

Another program, Pay As You Earn — PAYE, also caps repayments based on your income, and will forgive outstanding federal student loans after 20 years. Under PAYE, payments must exceed 10 percent of what you earn above 150 percent of the poverty level under a standard 10-year repayment plan.

To be eligible, you must have taken your first federal loan after Sept. 30, 2007 and at least one loan after Sept. 30, 2011.

Public Service Loan Forgiveness – Certain federal loans may be forgiven after 10 years of qualifying payments if you take a job with a federal, state or local government, a non-profit and other public service organizations.

Volunteer – There are a number of programs such as AmeriCorps, Peace Corps and the military, in which service will accrue a benefit that reduces an outstanding loan balance. The amount varies depending upon the program.

Pre-Pay Principal – Pre-payment of principal may help lower the lifetime interest costs of a loan. To raise cash to fund pre-payments, one idea is to ask that birthday and holiday gifts be cash and direct any raises, bonuses or overtime pay to pre-payments. If you do pre-pay principal, be sure to target the loans with the highest rate of interest.

Loan Consolidation – You can consolidate your federal loans through the Direct Loan program or, if you have private loans, through a private lender. However, this may only make sense if you can obtain an overall lower interest rate.

Remember that dealing with your (or your relatives) student loan debt should be taken into consideration with your overall financial plan.