A college degree is considered a vital component of the American Dream, but it can be expensive. The average student loan debt is about $30,000.
The average debt can run into six figures for people who attended a professional or graduate school.
Too much student loan debt can prevent you from saving for retirement or buying a home.
Fortunately, there are several ways to lower your monthly payments while still saving money. The article covers how to get rid of private student loan debt.
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How to Get Rid of Private Student Loan Debt Legally
Here’s how to get rid of private student loan debt legally.
Consolidate Multiple Student Loans Into One Payment
Although federal Direct Consolidation Loans are not available for private student loan borrowers, it’s possible to consolidate multiple loans into one.
This can help make your debt repayment process more accessible and reduce monthly payments.
Another benefit of this strategy is that it allows you to lower your payments by taking a longer repayment period.
You can consolidate your student loan to lower your monthly payments and lengthen your loan term.
Since private student loan lenders’ rates vary depending on the borrower’s creditworthiness, consolidating can help you get a lower rate. This strategy can also assist you in qualifying for a lower interest rate.
If you have both private and federal student loans, it’s important to consider consolidating both into one monthly payment.
Doing so would require transferring all of your debt into a private loan. This will most likely result in the loss of various benefits, such as forbearance and income-driven repayment plans.
If you have federal and private student loans, it’s also important to consider consolidating both separately.
Doing so would require transferring your federal debt into a Direct Consolidation Loan.
Although this strategy would result in two separate payments, it can keep you from losing access to federal benefits.
Pay Down Extra Towards the Principal
Your monthly payment is the lowest amount you can pay for student loans. It doesn’t include penalties and late fees, and it’s the lowest amount you can expect to spend on the debt.
If you have a lot of money left over, an extra amount on top of your payment can help lower the principal balance.
Doing so will help lower the amount of debt that you have and pay off your loans faster.
It can also save you money on interest over the long term. However, make sure that you notify your loan servicer before making any additional payments.
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Refinance Your Student Loan at a Lower Rate
Refinancing student loans is a process that involves taking out a new loan to pay off one or more of your student debts.
Also, refinancing at a lower interest rate lowers your monthly payments and makes it easier to pay off your loans.
Refinancing at a low rate could save hundreds or even thousands of dollars in interest charges.
The interest rate that a private student loan refinancing company will charge you is based on your loan’s repayment term and amount.
In addition to your credit history, other factors, such as your debt-to-income ratio and DTI, also affect the rate they will charge you.
Although it’s possible to refinance your student loans, it’s not always the best idea for everyone.
Refinancing could result in you losing access to federal protections such as income-driven repayment plans and administrative forbearance periods.
File for Bankruptcy
Although it can be challenging, getting rid of your student loan debt through bankruptcy is generally possible.
Most people can get their debts erased through bankruptcy if they have private student loans instead of federal loans.
If you’re considering filing for bankruptcy due to your student loan debt, you must believe that you have exhausted all your other options.
If you’re struggling with a huge amount of student loan debt that’s in default and experiencing economic hardship, then bankruptcy may be a viable option.
However, be aware that it can have a long-lasting negative impact on your credit history, preventing you from qualifying for a mortgage or renting an apartment.
Before making a decision, you must speak with a bankruptcy attorney and a credit counselor.
SEE ALSO: Best Place to Get Private Student Loans
Conclusion
Getting rid of your private student loan debt isn’t easy, but it is definitely worth it in the end.
We all know how it can become a barrier to achieving a certain height, so we advise you to do it as soon as possible.
