A lot of progress has been made over the past few years to help borrowers who have been struggling with Federal student loan debt. For borrowers with Federal student loans, there are many different loan repayment plans and student loan forgiveness programs that can help.
However, this is not the case with private student loans. Until recently, when Wells Fargo and Discover Bank announced that they would help student loan borrowers, there were very little options for borrowers struggling with private student loan debt.
Take the story of Ronald Stroud. He is buried in $80,000 in private student loan debt and is terrified that he can’t escape it. His job pays him about $35,000 a year out of college, and he doesn’t know if he’ll ever be able to get out of student loan debt. The bill keep mounting, and his lender won’t work with him. He considered filing for bankruptcy, only to learn that his private student loans aren’t dischargeable in bankruptcy.
The truth is, his story is similar to thousands of borrowers across the country. So what is a private student loan borrower to do?
Know Your Loan Terms First
First, it’s essential that you know and understand the terms of your private student loan. You need to know your lender, the contact details, the balance of the loan, and repayment status for each loan you have. This can be tough, especially if you get a different private student loan through each year of school – you could end up with 4 or 5 different loans and lenders.
If you have Federal student loans, keeping track is easy. You simply access the National Student Loan Data System here: https://www.nslds.ed.gov
However, if you have private student loans, you have to track down your lender from your credit report. You can get one free credit report per year at AnnualCreditReport.com. On your report, you should have all of your loans listed with the name of the lender and contact information. You can then use that information to contact your lender and get your address updated to receive statements.
Attempt To Negotiate With Your Bank
Second, if you really can’t afford your payments, you should always attempt to negotiate with your bank. This is tough, because banks know that private student loans can’t be discharged, so they will likely always get their money back. The goal of your contacting them should be to find a win-win situation for both of you.
For the bank, they are in business to make money. They make money by collecting on your loan and then making new loans. So, if you don’t pay, they don’t make money. However, they know they will always be paid (they can wait it out, file wage garnishments, and more). But the longer they wait and the more paperwork they have to do, the more expensive it becomes.
In many cases, they will make small changes to your loan – lower payment, longer terms – if it means that they will be repaid quicker or cheaper. So, if you need a reduced payment, just ask and you might get it granted.
Focus On Earning Extra Income
Finally, if you’ve tried to negotiate and still are struggling, you have to focus on the other side of the financial equation – income. You simply need more income. There are lots of ways that you can boost your income – from working extra shifts at work, to getting a part time job, to simply side hustling on your own. In fact, here’s over 50 different ideas for earning extra money.
When I was working to pay off my student loan debt, I side hustled each month to make an extra $1,000 to $2,000. That’s what allowed me to escape from student loan debt quickly. It’s possible for most people to find some way to earn extra each month – and each bit of extra money you earn can go towards getting rid of these student loans.
Article Source: Forbes