It is estimated that nearly 43 million Americans, or one in eight American adults, carry student loan debt. The amount of student loan debt in the United States is staggering-nearly two trillion dollars.
Many college students in the U.S. take out student loans to finance their college expenses because the cost of college is more than most households can afford.
If you are struggling to pay off your student loan debt, there are some unique ways you can get it done.
Here are five ways you can reduce your student loan debt, and brighten your overall financial picture.
1. Reverse Mortgage
If you are a senior adult, or you own your home outright, and you carry student loan debt, you may want to think about a reverse mortgage. Not sure how a reverse mortgage works? In a reverse mortgage, you receive money upfront for your home. You can choose to take it in a lump sum, which you could use to pay off your student loan debt immediately, or you can make monthly payments, and use that money to pay off your student loan over time. Because you took out a reverse mortgage, you don’t make payments on the mortgage. Instead, the company you got the mortgage from will sell your home and keep the money when you no longer live there. This is a great way to get rid of your student loan debt before you retire.
2. Serve Your Community
If you are a teacher or you work in the public service sector, such as a police officer, firefighter, or other non-profit agency, you may be able to receive loan forgiveness. There are programs through the U.S. Department of Education that you can apply for. These programs forgive all or a portion of your student loan debt. Like many forgiveness programs, you can only receive credit for your student loan debt if you apply for it and if you have been making monthly payments for 10 years. If you do work in the public sector applying for loan forgiveness is a great way to get rid of your student loans for good.
3. If You Went to a For-Profit College
You may have been a student at a for-profit university that has either been closed, or that is currently under investigation by the United States government for fraud. If you attended an institution that is considered a for-profit school, rather than a non-profit institution, you may also be able to get your student loan debt wiped clean under the Borrower’s Defense to Repayment program. You can check to see if your institution is listed as a for-profit school through the U.S. Department of Education.
4. If Your School Closed
Many borrowers attended an institution that is no longer open. In the last two decades, many smaller colleges, community colleges, and vocational or technical colleges have closed. If your institution closed, you may be able to get your entire student loan debt forgiven.
You Can Consolidate Your Debt
One of the easiest ways to reduce or eliminate your student loan debt entirely is to consolidate your debt. If you have several student loans, there are programs to help you consolidate your debt and lower your student loan debt considerably. You will need to do some checking into your student loan debt because not all student loan debt will qualify under consolidation.
For example, if you have private student loans with a company, these debts can not be consolidated usually. If you have a mixture of institutional and federal student loans, these debts are eligible for consolidation. Not only does the federal government offer student loan debt consolidation, but there are student loan consolidation companies that can help you reduce your student loan debt.
In many cases, you can negotiate your student loan debt downward. For example, negotiation with the government may cut your student loan bill by a third, or even by a half. There are several ways you can get your student loan bill reduced. You can negotiate with the federal government directly to accept a lower payoff in exchange for an immediate cash payoff. You can also choose to work with a company that can negotiate on your behalf.
In this case, you would pay the company a sum each month, which goes into a holding account. When the company feels you have accumulated enough money in the account, they negotiate with the loan agency to accept the lower amount in exchange for an immediate payoff. While debt consolidation will only work with federal and institutional loans, negotiation can work with all types of loans, such as private and public student loans.
Refinancing is another option that can be very helpful for students struggling to repay their debts. They can take out a new student loan with a lender who pays off their old student loans. By doing so, students can get a better interest rate and repayment plan. It is particularly useful for students to enroll in the Citizens Bank student loan refinance program, which allows them to refinance both federal and private student loans.