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I’m a teacher, still live with my parents, and have $103K in student loan debt, which is more than 2x my salary. What are my options?

I’m 35 and have $380K in student loans. How to get out of student loan debt fast
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Question: “I am a fourth-year teacher aged 33 earning $41,098 a year before taxes with about $103,000 in student loans. I still live with my parents because I can’t afford a mortgage or get a loan because my credit is poor from student loan debt .What are my options?”

Answer: Student loan debt that far exceeds one’s annual salary is common, and taking on high debt adds a significant burden to your monthly budget, even if you’ve trimmed housing costs by mating with your mother. So with student loan repayments set to resume in May, it’s time to take steps to get your financial home in order.

Have a question about getting out of debt? Send an email to chill@marketwatch.com.

The good news is that in terms of federal lending, teaching is an area where there are “a lot of student loan repayment assistance and forgiveness programs,” says Andrew Bentis, loan expert and certified student loan advisor at StudentLoanHero. Here are some options.

Income-Based Payment Plans and Other Payment Options

First and foremost, examine – and strategize – your monthly loan repayment. If your plan is too high, consider applying for an income-driven repayment plan through your Federal Loan Service, says Anna Helhusky, student loan expert at NerdWallet. “This will limit your payments to a portion of your discretionary income and extend the pay period,” she says. The standard repayment time is ten years; With an income-driven payment plan, you may get a 20-25-year payment plan, after which your remaining balance is forgiven.

“Paying off income should lower the payments, but the borrower won’t pay off their debts quickly and the interest will continue to accrue,” Hilhosky adds. “This may not be entirely important for a borrower who is a teacher who may have options for federal debt forgiveness.” (We’ll get to that.)

There are four income-driven payment plans including Revised Pay As You Earn (REPAYE), which are designed to maintain reasonable monthly payments in relation to income. Each comes with eligibility requirements as well as caveats to consider (regarding issues like taxes and marital status). Depending on the plan, the repayment term will be either 20 or 25 years and the discretionary income percentage will be 10%, 15%, or 20%, says Mark Kantrowitz, author of How to Appeal for More Financial Aid for College.

“Borrowers on income-driven repayment plans can qualify for payments as low as $0,” says Bentis. “Odds are that this individual’s payments will not be zero, but in all likelihood they will go down. That would give some breathing space in the monthly budget.”

For private loans through a bank, credit union or other lender experts advise going to the source. Explain that you want a temporary or permanent change, which could be a lower interest rate or a longer repayment period. Note, however, that the acceptability and flexibility of private lenders will vary.

Student loan forgiveness

There are two loan forgiveness programs public school teachers can qualify for — Teacher Loan Forgiveness (TLF), which experts recommend as a first step, and Public Service Loan Forgiveness (PSLF).

TLF is a federal program for qualified full-time teachers who work in low-income schools. “After five consecutive years of teaching, up to $17,500 of their direct federal loans can be forgiven,” Hilhosky says.

What if there is residual debt, as in the case of this borrower. This is where the PSLF comes in. “You can double back,” says Bentis. The PSLF allows people who make 120 loan payments while working as public servants or teachers to get a portion of their student loans tax-deductible.

“This borrower may wish to take advantage of the limited waiver currently in place that counts any payments made while working for an eligible employer,” Hilhosky says. “It came into effect two months ago, and will remain in effect until the end of October.”

Until October 31, 2022, borrowers may receive credit for prior payments that were not previously eligible for the PSLF. If you are denied by the PSLF, you may qualify under a provisional waiver.

A long-term consideration, according to Kantrowitz: The income-driven repayment tolerance begins after 20 or 25 years, depending on your plan.

When you control your student loan payments, you can also rehabilitate your credit standing at the same time. Down the road that will make getting a mortgage or other loans more feasible.

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