The ability to reduce student loan debt is important to many graduates. Here are a few practical ways to help you with this.
Ways to Reduce Student Loan Debt
One- Loan Forgiveness and Repayment Programs
There are many programs available designed to reduce student loan debt. If you work in certain industries you can apply to have portions of your loans reduced, or canceled all together. Working for certain social programs, like the Peace Corps, will allow you to have your loans repaid in exchange for your service. There are also government careers that allow you to have portions of your loan paid in exchange for time at work. An example of this would be a lot of teaching programs offer loan cancellation based on the years of service you commit to certain communities.
There is a program beginning in July of 2009 that will allow you to reduce the amount of your loans based on a sliding scale. You can check in to these programs by visiting www.ibrinfo.org.
Two- Payments and Interest Rates
If you don’t qualify for any forgiveness programs, you can still reduce student loan debt simply by being smart with your payments. If you make your payments on time and don’t miss any, you may be able to have the interest rate lowered on your loans. Every year at the beginning of July Congress determines what the new cap on student loan interest is. As long as you have a solid payment history, the lenders may work with you to lower the interest.
Another good practice is to pay additional when you can. The best way to be able to do this consistently is to sit down and create a budget. Figure out just how much money you pay out every month in necessary expenses. Compare this to the amount of money that comes in to your household and you will be able to see how much expendable income you have. Use a good chunk of this to send with your normal loan payment and you can reduce the length of time you pay on your loan by months, and in some cases by years.
Three- Consolidation
Another smart way to reduce student loan debt is to take advantage of consolidation programs. These will allow you to take the numerous small loans you may have and lump them together in a larger loan. You need to research these programs before you pick one. In many cases they can save you money, but occasionally you will find one that will save you money monthly by extending the terms of your loan. This can hurt you more than it can help you in the long run if you are trying to reduce student loan debt.