When I talk with recent college graduates about financial planning, the issue of student loan repayment is a frequent topic. So many millennials feel they have to postpone investing in their future until those loans are repaid. Often the monthly payments are substantial and make it difficult to direct funds to other investments, including savings.
Students can amass some hefty debts during the four or more years it takes to graduate from most colleges and universities. For many, the degree is worth the burden of accumulated debt. However, many are looking for ways to make “payback” easier. Today, there are plans available that offer flexible payment schedules.
If you are struggling to make payments on federal student loans, you may be eligible for a repayment plan that is based on your income and family size. After you submit verifying information, your monthly payments can be reduced to affordable amounts. Unfortunately, not all borrowers know about these plans. Here’s how to find the information:
The U.S. Department of Education offers numerous plans to borrowers with federal student loans. The income-driven repayment (IDR) options make payments more affordable by setting a monthly payment amount that is based on your income.
There are two ways to access an IDR plan.
- You can contact your student loan servicer directly about enrolling. You will have to submit proof of your income, such as a tax return, pay stub, or benefits check, to determine your payment. Your servicer should provide information about other repayment options available to you.
- You can enroll online at StudentLoans.gov. After you set up an account using your FSA ID you will have access to repayment and consolidation plans as well as the Education Department's repayment estimator tool. This website also has a list of all the income-driven plans and addresses some frequently asked questions.
Once you sign up for an income-driven repayment plan, you will need to requalify each year with updated financial information. Your loan servicer may not remind you of the deadline for requalifying, so it is important that you keep track of the dates yourself.
Don’t let your student loan payments postpone financial planning for your future. I can help you explore the flexible payment options available now. Contact me to schedule a time and place to meet and we’ll get started on a plan for your financial independence.
Material discussed is meant for general illustration and/or informational purposes only, and it is not to be construed as investment, tax, or legal advice. Although the information has been gathered from sources believed to be reliable, please note that individual situations can vary. Therefore, the information should be relied upon when coordinated with individual professional advice.