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Hey, Recent Graduate. The Grace Period On Your Student Loans Is Over And It’s Time To Pay Up

frustrated womanIf you graduated or quit school this past May or June, your six-month grace period is about to expire and Uncle Sam wants to start getting his money back.

Have you actually sat down to determine how much you owe on your student loans? Given the fact that they’re parceled out one semester at a time and that you might have gotten several different types of loans, it wouldn’t be surprising if you didn’t know exactly how much you owe. Fortunately, there is an easy way to figure this out and that’s the National Student Loan Data System (NSLDS). Go to its website, log in with your student ID and you’ll be able to see all of the information about your federally backed student loans. This will include the date the funds were disbursed, the amount you borrowed on each loan, the amount you owe and the type of loan. You can save all this information to your student loan portfolio, which is a good idea, as this will make it much easier to access the data in the future.

Look into deferment

If you don’t yet have a job or are a member of the “underemployed,” you could think about applying for a deferment or forbearance. A deferment would give you a temporary 12-month “timeout” before you would have to start repaying your loans. If you have a Direct Subsidized Loan, a Federal Perkins Loan, and/or a Subsidized Stafford Loan, the government will pay the interest on it during that 12-month period.
If you don’t qualify for a deferment, you could try for forbearance. This would also give you 12 months where you would not have to make your payments or it could mean a reduction in your interest rate. However, the interest charges will continue to accrue on both your subsidized and unsubsidized loans as well as any PLUS loans.

How do you get a deferment or a forbearance?

If you want to apply for a deferment and have a Direct Loan or FFEL Program loan you will need to call your loan servicing company. For Perkins loans contact the school you were attending when you got the loan. Forbearance is a bit different in that there are two types – discretionary and mandatory. You will need to discuss this with the company that services your loan as it will decide whether to give you a discretionary forbearance. On the other hand mandatory forbearance is just that. Your loan servicer must give you forbearance if you are serving a dental or medical internship, employed in a national service position, or teaching in a program that qualifies under teacher loan forgiveness.

Note: There are some other circumstances where you would be eligible for a mandatory forbearance and you can learn about them by clicking here.

Understand your repayment options

Assuming you did not choose another repayment plan you were automatically put into Standard 10-Year repayment. Under this plan you will have a fixed monthly payment and 10 years to repay the loan. If you believe you would have a hard time making those payments, there are alternatives. One of the most popular of these is Graduated Repayment. Choose this program and your payments would start low then increase gradually every two years. This can be a good option if you are just starting out in your career and are a low earner. The idea here is that your salary will also grow over the years so that it will be easier for you to make those payments as they get bigger.

A second way to reduce your payments is through Extended Repayment. Under this program you are given up to 25 years to repay your loans instead of the standard 10. While this would lower your monthly payments dramatically, you would end up paying more interest over the life of the loan because of its longer term.

There are also three income driven repayment programs – Pay As You Earn, Income Based and Income Contingent. As you might guess from their names all three of these programs base your monthly payment on your income. Pay As You Earn was in the news recently when Pres. Obama issued an executive order that made about 3 million more people eligible for the program. If you are one of them you could see your monthly payments capped at 10% of your disposable income. Income Based repayment also has eligibility requirements and caps your monthly payment at 15% of your disposable income. Income Contingent repayment basically has no eligibility requirements and also caps your monthly payment at 15% of your disposable income.

One of the biggest benefits

One of the biggest benefits of federally backed loans is that you can always change repayment programs. As an example of what this means, you could start with Graduated Repayment, wait six years until your payments have grown larger and then change to Income-based Repayment.

Look for ways to save

The best way to save on your monthly payments is to switch to a repayment program with lower payments. However, there are some other ways to save money on those payments. For example, you could save a bit if you sign up for auto pay where your payments are automatically taken out of your checking account each month. Also, you can deduct as much as $2500 of the interest you paid on your federal and private student loans on your federal income taxes.

Consider consolidation

Finally, you could consider consolidating your loans. There are several reasons to do this. First, you would then have just one monthly payment to make in place of the multiple ones you’re making now. Second, you would likely have a lower interest rate and you would definitely have more years to repay the loan, which translates into lower monthly payments. While there is a lengthy explanation of how the interest rate is calculated if you get one of these loans, the simplest way to put it is that your new interest rate will be higher than the lowest interest rate you’re currently paying but lower than the highest.

How To Make Debt Consolidation Loan EffectiveGet a private consolidation loan?

You could also opt for a private consolidation loan. The interest rates on these loans are very low right now so you might be better off with one of them. However, as with many things in life, it’s important to shop around so that whether you get a federal loan or a private loan, you get the best deal and a payment you can live with –as you will need to live with it for as many as 25 years.

Think before you consolidate.

Don’t rush out to get either a Federal Direct Consolidation loan or a private loan until you understand the downside, which is that you would lose the perks that come with other types of federal loans. For example, you would no longer be able to change repayment plans. You wouldn’t be eligible for deferment, forbearance, forgiveness or loan cancellation. And you won’t be able to take advantage of any of the income-based repayment plans.

The one thing not to do

As you have read there are a number of different ways to handle your student loans but there is one thing you should definitely not do and that is miss a payment or be late making a payment. With federal loans you are considered to be in default the day after you miss a payment. This won’t be reported to the credit bureaus for 90 days but when it is reported it will have a serious effect on your credit score. Plus, the government can get very ugly when it comes to collecting arm defaulted student loans. It can garnish your wages without having to go to court, seize part of your income tax refunds or even prevent you from getting a professional license.

Could Rolling Jubilee “Disappear” Your Student Debt?

young magician performing with wandYou might remember that about three years ago there was a whole bunch of people in New York City protesting income disparity. The movement came to be known as Occupy Wall Street. What, you might ask, ever happened to that movement? Well, it’s morphed into an organization called Strike Debt that has a program titled Rolling Jubilee that might be able to erase your student loan debt.

One lucky debtor in Kalamazoo Michigan woke up one day and found an odd letter in the mail. What it basically said is that, “we have good news. We got rid of some of your Everest College debt.” It went on to say that her private student loan in the amount of $790.05 had been forgiven outright by an organization called Rolling Jubilee.

About $15 million erased

Since November 2012, Rolling Jubilee has purchased and eliminated around $15 million of debt in the form of unpaid medical bills. It recently announced that it had also eradicated $3.8 million in private student loans for almost 3000 students.

How this works

While Rolling Jubilee can’t do much about federal student debt, it is able to help with private loans due to a quirk in the way debt works these days. When people stop paying on a debt it becomes delinquent. The lender usually writes off the debt after about six months and sells it off at a cheap price to a third-party debt collector. What Rolling Jubilee is now doing is buying some of this debt using donations it raises online. In most cases it’ s able to buy student loan debt for three cents on the dollar or less. Then, instead of trying to collect on the debt, Rolling Jubilee just makes it disappear.

Just a drop in the bucket

Student loan debt is now estimated to be about $1.2 trillion and more than 40 million Americans have some form of it. Rolling Jubilee understands that the number of people it has been able to help is only a drop in the bucket and doesn’t solve the actual problem. The group’s goal is to draw attention to the predicament of those millions of people that have unpaid student loans – especially loans with high interest from expensive for-profit colleges. It’s next step is to get a large number of people organized to push for policy changes that would allow debtors to get release from obligations such as student debt that they are unable to meet.

For-profit colleges have come under fire recently due to their disproportionate contribution to the $1.2 trillion in student loan debt. They’ve enrolled about 13% of all students but have been responsible for 50% of the students that defaulted on their loans. Strike Debt has deliberately targeted one of the largest, Corinthian Colleges, the company that owns Everest College and several other for-profit school chains. It was already having serious financial problems when the Department of Education put a hold on financial aid payments to the company – due to its failure to satisfy requests for information made by the Department. In fact, Corinthian Colleges currently has some 200 lawsuits pending for fraudulent practices. The Consumer Finance Protection Bureau announced recently yet another lawsuit against the company for alleged predatory lending. The Bureau’s goal in this lawsuit is obtain relief for borrowers because it believes the company misled students about job prospects, pressured them to take out private high-interest loans and then used high-pressure debt collection tactics.

Not even bankruptcy can help

One of the main reasons that Rolling Jubilee turned its attention to helping people with student debt is because these loans usually can’t be dismissed by a chapter 7 bankruptcy – whether it’s a private or federal student loan. Before 2005 it was possible to get private student loans dismissed through a chapter 7 bankruptcy just like any other kind of unsecured debt (think credit card debt). However, our Congress passed a law that year that changed the status of private student loans in a bankruptcy to be the same as that of federal loans. What this means is that if you want to have any kind of student loan discharged you must show that repaying it would cause you to experience an undue hardship.

What is undue hardship?

Most bankruptcy courts throughout the US use what’s called the Bruner test to determine undue hardship. This consists of three conditions you would need to meet in order to get your student loans discharged.

Poverty – The first is that you must able to show you cannot maintain a minimal standard of living for yourself and your dependents based on your current income while repaying your loans. In this case, minimal standard of living is not the same as a middle-class standard of living and is a much lower standard.

Persistence – Second, you must be able to show that your financial situation is likely to continue for most or all of your repayment period

Good faith – – And third, you must show you’ve made a good-faith effort to pay off your student loans.

Whatever you do, don’t default

As of 2012, 9.1% of student loan borrowers had defaulted on their loans within two years of graduating. This is up from 8.8% the previous year. And while 9.1% doesn’t seem like a significant number that translates into 375,000 borrowers. Even worse, 13.4% of borrowers defaulted within three years after they made their first payments.

Trust us when we say these people made a big mistake – especially in the case of federally backed loans.

Power that regular collection agencies would kill for

It’s not a good idea to default on any loan. But it’s especially bad to default on a federally backed student loan. Technically, you are in default on a student loan the day after you miss a payment. In reality, your debt won’t be reported to the three credit bureaus until you have missed your payments for 90 days or three months. If you have still failed to make a payment after nine months, the odds are that your debt will be turned over to a student debt collection agency. These collectors have powers that regular collection agencies would kill for. They can garnish your wages as well as your Social Security benefits without going to court. They can take part of your income tax refunds and even block the renewal of any professional licenses you hold.

What you can do if you’re in defaultwoman thinking

There are ways to get a student debt out of default. The first of these is probably the simplest answer and that’s to just repay the loan. There are several different ways to repay defaulted loans depending on the type of loan you have. You can learn more about repaying your loans by clicking on this link.

A second way to get a federally backed student loan out of default is called loan rehabilitation. To do this, you must first agree to a reasonable and affordable payment plan and then make at least three voluntary payments. A lender must then purchase your loan. The best thing about loan rehabilitation is that if you can do it, you will get back some of the benefits that came with your original loan such as income-driven and Extended Repayment. In addition, once you get your loan rehabilitated …

  • The default status on your defaulted loan will be removed
  • This default status that was reported to the credit bureaus will be erased
  • If your wages are being garnisheed, this will stop and …
  • If the Internal Revenue Service is withholding any of your income tax refund, this will also stop.

Issues to be aware of if you are able to rehabilitate your loan successfully include the fact that your new payment may be more than what you are paying when you were rehabilitating the loan. Second, the total amount you owe may increase because collection costs may have been added to your principal balance. And finally, if your late payments (delinquencies) were reported to the credit bureaus before your loan defaulted, they will not be removed from your credit report.

Loan consolidation

The third alternative for getting student loans out of default is to get a Direct Consolidation Loan. This would allow you to pay off the balances on multiple student loans and end up with just one loan and one monthly payment. You will have a new interest rate that will be fixed for the life of the loan. And you will be eligible to choose a new repayment program such as Pay As You Earn, which would cap your monthly payment at 10% of your disposable income.

Are You Waiting For the Good Fairy Of Student Debt?

Young black college graduate with tuition debt, horizontalIt’s currently estimated that outstanding US student loan debt exceeds $1 trillion. Assuming this is true it would make student loan debt an even bigger issue than credit card debt. And depending on which source you believe this past June’s graduates owed an average of either $24,000 or $33,000 in student debt.

How did we get to this place?

Some people believe the problem began way back in the Reagan administration when Congress shifted funding from student aid to student loans. While this may be true it’s equally true that the cost of a college education has skyrocketed over the past 20 years. In fact, the cost of going to college has been increasing at about a 7% rate per year for decades. The overall consumer price index has risen 115% since 1985 while the college education inflation rate has grown nearly 500%. What this translates into is if college tuition cost $10,000 in 1986 and its cost had increased at the same rate as inflation, it would now cost $21,500. However, the average is now $59,800 or more than 2 1/2 times the rate of inflation. Given this, it’s fairly easy to see why most people end up having to get student loans to pay for their educations.

Is it worth it?

Is a college education really worth paying $59,800 or more just for your tuition? The answer to that is a simple “maybe” because it will depend largely on your field of study. If you choose a STEM major (Science, Technology, Engineering, Mathematics) then borrowing money to help pay for your education will definitely be worth it. On the other hand, if your passion is preschool education, anthropology, archaeology, philosophy or fine arts then getting loans to finance your education may not pay off.

How to determine how much is too much

If you are in college there is a way to determine how much is too much. First, you will need to determine two things — how much your starting salary will be in your intended field and how much debt you will have when you graduate. If your total debt is less than your annual starting salary, you should be able to pay back your student loans comfortably in 10 years or less – if this is what you plan on doing.

Use a student loan calculator

Once you determine how much money you will need to finance your schooling, you could use a student loan calculator to determine what your payments will be. When you match them against your starting salary you should have an even better idea of how much is too much.

The gift that keeps on taking

Student loan debt is the opposite of the gift that keeps on giving as it keeps on taking. If when you graduate you are on the Standard Repayment program it will take you 10 years to repay your loans. This could force you to delay some of the most important things of life such as getting married, buying a house or having kids. While you could move to another repayment program such as Extended Repayment to get your monthly payments reduced, this could keep you in debt for as long as 25 years. You could still be repaying your student loan debts when your children are worrying about paying for their educations.

How to keep college debt under control

If you’re still in school there are some things you can do to keep your college debt from getting out of control. You should make sure you apply for scholarships through sites such as Scholarships.com and Fastweb.com and through your college or university. Second be sure to fill out your FAFSA as you might qualify for grants. If one of your parents belongs to a club or organization or if you are the member of a church, see if it offers scholarships or grants. Third, when you borrow money be sure to get federal student loans and not private student loans as private ones tend to have higher interest rates and are subject to change. Finally, pay as much out-of-pocket towards your college costs as you can by working part-time or try to graduate faster, which will mean fewer semester fees.

If you’ve already graduated

In the event you’ve already graduated and owe a ton of student debt the one thing you don’t want to do is default on your federal loans. The government actually has more power to come after you then does even the most aggressive debt collector. It can garnish your wages, take part of your income tax refunds or seize 15% of your Social Security payments. You can’t even get out from under student debt by filing for bankruptcy.

Don’t hold your breath

Believe it or not you can’t even refinance federal student loans. However, there have been several attempts made to change this. In the Senate, Elizabeth Warren introduced a bill that would make it possible for people to refinance their student loans at better interest rates and Rep. Mark Pocan did the same thing in the House. While these bills stalled in committee, both Warren and Pocan have said they will bring them up again in the next session of Congress.

Stop waiting for a good fairy

If you have student loans at 5% or 6% and could refinance them down to 2% or 3% this would certainly help with your monthly payments. But what many people are experiencing is buyers’ remorse. They wish they had never borrowed the money and what they really want is for a fairy to swoop down and forgive all their student debts. News swept the Internet a few months ago that Pres. Obama was going to issue an order forgiving all federal student loan debts. This, of course, was a false rumor. Pres. Obama really doesn’t have the authority to do thie and even if he did, it would likely send our economy into a tailspin.

two men shaking handsBuckle down and repay them

At least at this point the best answer to federal student loan debts is to buckle down and repay them. If you’re on the 10-Year Standard Repayment program and are having a tough time making your monthly payments, you could switch to another repayment program. One of the most popular of these is Graduated Repayment where your payments start low but then gradually increase every two years. This can be an excellent option if you’re just starting out in your career. There are also three different types of income-driven repayment programs where your monthly payments would be based on your income. If you were to qualify for one of them – Pay As You Earn – your monthly payments would be capped at just 10% of your discretionary income and you could earn forgiveness after 10 years.

Check out your options

What this means is that you need to check out your other options to see if there isn’t another repayment program that would be better for you given your circumstances. The government site https://studentaid.ed.gov/repay-loans/understand/plans has good information about the various repayment programs and how to know if you would be eligible for one or more of them.

The Big News About Student Loans Might Not Be So Big After All

woman thinkingPeople struggling with student debts were excited to hear the big news that Pres. Obama had signed an executive order that could make it easier for millions of Americans to pay off their student loans.

Unfortunately, the big news turned out to be not that big.

It won’t help every borrower

If you aren’t aware of this, and many people aren’t, there are seven different ways or programs for repaying federal student loans. Four of these are income-based as they take into consideration your income as well as your family size.

Pres. Obama’s executive order affected only one of the four – the Pay As You Earn option. If you are on this plan or would be eligible for it, this could help by capping your monthly payments at 10% of your disposable income (more on disposable income later).

It will still be 20 years before forgiveness

One thing that the President’s executive order didn’t change in Pay As You Earn is the number of years before loan forgiveness. You will still be required to make all your loan payments and on time for 20 years. Do this and if you still have a remaining balance it will be forgiven – or erased.

More people eligible

One of the most significant changes made by the President’s executive order is expanding the number of people who can take advantage of Pay As You Earn. Prior to this order, only newer borrowers were eligible. However, beginning next year, anyone who took out loans before October of 2007 or who stopped borrowing on their loans by October 2011 will now be eligible. It is estimated that this will affect about five million people.

Must prove a “partial financial hardship”

To be eligible for Pay As You Earn, you must prove a partial financial hardship. You would have a partial financial hardship if the annual amount due on all of your eligible loans as calculated under 10-Year Standard Repayment exceeds 15% of your discretionary or disposable income.

Determining your disposable income

As you read earlier, the President’s executive order caps monthly payments under Pay As You Earn at 10% of the borrower’s disposable or discretionary income. You need to know your discretionary income in order to determine whether or not you would qualify for Pay As You Earn. So how do you determine your disposable income? First, you need to calculate your monthly Adjusted Gross Income and then subtract 150% of the Federal poverty line, which this year is $1450. Here’s an example of this. If your Adjusted Gross Monthly Income were $4280 and you subtracted that $1450, your disposable or discretionary income would be $2800. Multiply this by 10 percent and your Pay As You Earn monthly payment would be $280, which could be substantially less then what you’re now paying.

Only certain types of loans qualify

There is yet another eligibility requirement, which is that only certain types of loans qualify. They are:

  • Direct Subsidized Loans
  • Direct Unsubsidized Loans
  • Direct PLUS Loans made to graduate or professional students
  • Direct Consolidation Loans that did not repay any PLUS loans made to parents

If you have other types of loans such as subsidized federal Stafford loans or FFEL consolidated loans, you would not qualify for Pay As You Earn. However, you could get a federal Direct Consolidation loan, use the proceeds to pay off those other types of loans and would then have a loan that would be eligible for Pay As You Earn.

The one downsideVideo thumbnail for youtube video 10 Signs That Your Financial Management Skills Suck!

The one downside of Pay As You Earn – as with all of the income-driven repayment plans – is that you must prove your income every year. In other words, you will need to submit documentation to your loan servicer every year proving your family size and income in order to stay eligible. If you ever reach the point where your family size and income exceeds the amount you would pay under 10-Year Standard Repayment, your monthly payment will be adjusted to that of 10-Year Standard Repayment. This new payment will be based on the loan amount you owed when you first started Pay As You Earn – meaning that it could result in a substantial increase in your monthly payment.

If you can’t qualify for Pay As You Earn

If for some reason you would not qualify for Pay As You Earn, there are three other income-driven repayment plans. They are Income-Contingent, Income-Based and Income-Sensitive.

Income-Based Repayment – This plan was meant to replace the Income-Contingent and Income-Sensitive Repayment plans though they are still available. It is much like Pay As You Earn and also caps your monthly payments at 10% of your disposable or discretionary income. It is also based on the size of your family and requires that you submit documentation every year proving your income. Loans that are eligible for income-Based Repayment include all Consolidation Loans made under the Direct Loan or Federal Family Education Loan programs, all Stafford Loans and all Grad PLUS Loans.

In 2010, the president took an executive action that made this program available to more borrowers by the end of 2012 instead of 2014. This latest change should reduce the monthly loan payments for an additional 1.6 million responsible student borrowers.

If you want to determine whether you would qualify for Income-Based Repayment (IBR), you should use the U.S. Department of Education’s IBR calculator to learn if you would likely qualify. This calculator takes into consideration your family size, income and state where you live to calculate your monthly payments. If this amount were less than the payments you are making on your loans under 10-year Standard Repayment, you would be qualified to pay back your loans under IBR.

If you were not a new borrower on or after July 1, 2014, your payments will be capped at 15% of your discretionary income but will never be higher than under 10-Year Standard Repayment. On the other hand, if you were a new borrower on or after July 1, 2014 your payments will be capped at 10% of your discretionary income.

Income-Contingent Repayment – Under this program you would make payments for 25 years before any remaining balance would be forgiven. You won’t need to prove a “partial financial hardship,” and your payments would be 20% of your discretionary income. Under this program, your monthly payments will be pegged to your income, the size of your family and the total amount you borrowed. Since your term will be 25 years, you will likely have lower monthly payments though you will pay more total interest over the life of the loan. Also, under this repayment program if you have a balance forgiven at the end of the 25 years, you will have to pay taxes on it.

Income-Sensitive Repayment – With this program, your monthly loan payment would be pegged to a fixed percentage of your gross monthly income. This would be between 4% and 25%. You would determine the percentage yourself. However, your monthly payment must be greater than or equal to the interest that accrues on the loan. Although you choose the percentage, be aware that some loan servicers set a minimum threshold on the percentage of your income based on your debt-to-income ratio. This program is like Pay As You Earn and Income-Contingent in that you must reapply every year. This usually means submitting your W-2 statements and tax returns. With Income-Sensitive Repayment your term or length of the loan is limited to 10 years. This means it will increase the size of your monthly payments to compensate for this. If Income-Sensitive Repayment interests you, be sure to go to the U.S. Department of Education’s IBR calculator to see if you would be eligible.

Two other alternatives

Most people will choose Income-Based Repayment over the other two alternatives explained above – assuming they are eligible. It’s just a better deal for most people. However, if you don’t qualify for any type of income-driven repayment, you still have two other options. The first is Extended Repayment. What this does is extend the term on a 10-Year Standard Loan from 10 years to 25. This almost always results in a lower monthly payment though you will pay more interest over the term of the loan since it’s 15 years longer.

A second alternative that is not income driven is Graduated Repayment. If you were to choose this program, your payments will be lower at first but then gradually increase every two years. Like with Extended Repayment, you will end up paying more interest over the life of the loan then under 10-Year Standard Repayment.

As you have read there are a number of different repayment programs available to those who have federal loans. If you are currently under 10-Year Standard Repayment, it would certainly be worth your time to use the U.S. Department of Education’s IBR calculator to learn what other repayment programs you might be able to take advantage of. You should also probably talk with your loan servicer. In any event, make sure you check out your options so that you will have a repayment plan that you can live with and that offers the best deal given your income and circumstances.

What Crazy Thing Would You Do To Pay Off Your Student Loans?

Video thumbnail for youtube video 6 Tips For Simplifying Your Financial LifeThe statistics are overwhelming and appalling. Students graduated from college this year owing an average of more than $29,000. Student loan debt now totals more than $1 trillion. Sixty percent of recent graduates have been unable to find jobs in their fields. Graduates age 24 and younger face a very uncertain job future and many experts say it’s only going to get worse – even though employment numbers continue to improve.

Will you be 50 and still paying on your student loans?

Here are more scary statistics. There are 10.6 million people ages 30 to 39 that are still paying on their student loans, 5.7 million ages 40 to 49 and worst of all, 4.6 million people age 50 to 59 that still owe on their student loans.

How do you feel about your student loan debts?

How would you describe how you feel about your student loan debts? Some people say they feel as if they were stuck in a trap with no possibilities of escape. Others say they feel as if they were sinking in quicksand or living under a big, black cloud. Then there are those who were so tired of paying on their student loan debts that they found some wild and crazy ways to quickly repay them.

Canoed across Ontario

One guy will call Stan was so desperate to repay his student loans that he moved to Alaska and took a job as a tour guide. Over the next three years, he took some other odd jobs. For example, he once canoed across Ontario, Canada transporting “voyageurs” (people who lived and dressed as if they were fur traders in the 18th century). Stan eventually decided to go back to school but he was so determined to not take on any new debt that he not only slept in a 1994 Ford Van on the Duke Campus he even cooked his meals in it.

Became a lab rat

Here’s an idea you may not want to emulate. Another recent grad, will call him Robert, volunteered to become a human lab rat by taking part in paid medical studies. In one of the studies, Robert spent two weeks in a room with a bunch of other people. He was given arthritis pills every day and provided urine and blood samples every hour so researchers could learn how effectively the medication was being absorbed into his bloodstream. In another study he received breast cancer medication via injections so that researchers could determine how his heart reacted to it. While the drug companies doing the studies give him insurance to cover any complications caused by the drugs, Robert noted that being a human lab rat was still scary.

Got a “sugar daddy”

If you’re like me you’ve probably never heard of the website SeekingArrangement.com. It’s where young women can find “sugar daddies” or rich, older men willing to pay for their companionship. One young woman’s sugar daddy paid her full tuition of $1500 a month at the California school she attended. Believe it or not this is on the low end compared to what most college women on the site earn. There are 350,000 “sugar babies” on the SeekingArrangement site about 41% of which are college students. According to SeekingArrangement, these young women average $4200 a month – not small change by any stretch of the imagination.

Mystery shopped

Many people have earned extra money to pay off their student loans faster by mystery shopping. Despite what you might think, there really are legitimate mystery shopper jobs. If you sign up with one of the companies that offer these jobs your initial assignments will probably not pay very well – between $6 and $15 per assignment. But if you stick with the program, you’ll eventually get better paying assignments. For example, one mystery shopper was assigned to opening night at a local racetrack. He not only received general admission for two, valet parking and money for a couple of bets but also a buffet dinner and two alcoholic beverages and was paid $60 for his time.

You don’t want to be a lab rat or a sugar baby?

If you’re not interested in finding some crazy way to pay off your student loans there are alternative repayment plans that could help. If you’re typical you’re probably on the 10-Year Standard Repayment Plan. But there are other repayment plans available that would yield lower monthly payments. Pres. Obama recently signed an executive order making more people eligible for the Pay As You Earn repayment program. If you qualify for this program your monthly payments would be capped at 10% of your discretionary income. However, to qualify you would need to show that you had a “partial financial hardship.” If you are unable to do this there are still other repayment options including Income–Based Repayment, Extended Repayment and Graduated Repayment. Each of these programs has different eligibility requirements and includes different types of federal loans. You can learn what these are by clicking here.

To consolidate or not to consolidate?Man having financial problems

If you, like many Americans, have multiple types of federal loans there is yet another option called a Direct Consolidation loan. The benefits of consolidating your loans include the fact that you would have only one payment to make a month and you would have a lower monthly payment because you would have 30 years to repay the loan. Of course, if you were to choose this option you would make many more payments and would end up paying a lot more interest. In addition, you could lose the benefits that came with your original loans such as deferment and those repayment options. Also, not all federal loans are eligible for consolidation. Here are the ones that are:

• Direct Unsubsidized Loans
• Direct Subsidized Loans
• Unsubsidized Federal Stafford Loans
• Subsidized Federal Stafford Loans
• PLUS loans from the Federal Family Education Loan (FFEL) Program
• Direct PLUS Loans
• Supplemental
• Federal Perkins Loans
• Loans for Students (SLS)
• Federal Nursing Loans
• Health Education Assistance Loans
• Some existing consolidation loans

Whatever you do don’t default

The sad fact is that about 15% of people with student loans go into default within the first three years. Whatever you do, don’t let this happen. You are literally in default the day after you miss a payment. However, this won’t be reported to the three credit bureaus until you’ve been in default for 90 days. When this happens your credit score will take a serious hit. Plus, your account could actually be turned over to a debt collector and trust us, you don’t want this to happen. Student loan debt collectors can literally make your life a living hell. They can garnish everything from your tax returns to Social Security payments and from wages to disability checks. If you default on a loan you can also be barred from the military, lose professional licenses and suffer other serious consequences. And if any of your loans do go into default you will be hit with extra fees and interest charges and will end up owing even more.

Send Sen. Tom Harkins a thank you note?

You may not be aware of this but it’s all but impossible to get student loan debts discharged through bankruptcy. If you owe $25,000 on student loans, you owe $25,000 on student loans and there’s not much you can do except repay the money However, Sen. Tom Harkins recently introduced a bill that would allow people who have student loans from private lenders to get them discharged through bankruptcy. This is only a small percentage of those who have student loans – like 10% to 15%. And the bill is unlikely to get passed until after the midterm elections. However, if you have a boatload of private loan debt, there may be help on the way.

8 Seriously Unconventional Ways To Pay Off Student Loans Fast!

student holding a past due envelopIf you graduated from school owing a boatload of student loan debts we might not have to tell you the effect this can have on your life. But it might be even worse than you think. American Student Assistance recently surveyed young college graduates and found.

  • 27% of respondents to ASA’s survey said that they found it difficult to buy daily necessities because of their student loans;
  • 63% said their debt affected their ability to make larger purchases such as a car
  • 73% said they have put off saving for retirement or other investments; and
  • The vast majority—75%—indicated that student loan debt affected their decision or ability to purchase a home.

Survey respondents indicated that in addition to limiting their ability to make major purchases, student loan debt also impacts their important life decisions:

  • 30% responded that their student loan debt was the deciding factor, or had considerable impact, on their choice of career field
  • 29% indicated that they have put off marriage as a result of their student loans
  • 43% said that student debt has delayed their decision to start a family

If you’re on the 10-year Standard Repayment Plan you’ll be paying on those student loans for 10 years. That’s a long time to be struggling with debt. The simple fact is that the faster you can get your student loans repaid, the better your life will be. While there are a number of “conventional” ways to earn extra money to pay off student loans such as getting a second job, pet sitting, substitute teaching or starting an online store, there are also some seriously unconventional  asways to pay off those loans and much faster than 10 years.

Join the Peace Corps

Would you be interested in both paying down your student loans and seeing the world? Then join the Peace Corps. This could lead to the cancelation of up to 70% of your Perkins student loan debt. However, if you have a Stafford or consolidated loan this program is not quite as wonderful but you would get a full deferment for up to 27 months. Plus, this would give you something positive to put on your resume and would be earn as you learn.

Become a human lab rat

One young man who was more than $100,000 in debt volunteered to become a human lab rat for pharmaceutical companies. He participates in paid medical studies such as one where he was paid $3000 to stay at the facility of a pharmaceutical company in a room with seven other people for 14 days. During those two weeks he took arthritis pills every day and then provided urine and blood samples every hour so researchers could study how effectively the medication was being absorbed into his bloodstream.

In yet another study, this young man received a breast cancer medication via IV injections so that researchers could see how his heart reacted to it. The pharmaceutical companies provide insurance to cover any complications caused by the drugs that he takes but he says that being a lab rat is still kind of scary.

Do mystery shopping

You can actually make decent money as a mystery shopper. However, when you first sign up you’ll probably get sent only to places such as fast food restaurants, oil change outlets and other opportunities that do not pay very well – probably between six dollars and $15 per assignment. However, if you stay with the program you will eventually get sent to more highly paid shops and stores. One mystery shopper was recently sent to evaluate opening night at a local racetrack. His compensation not only included general admission to the track, valet parking and money for three bets but also a buffet dinner and alcoholic beverages for two. In addition, he earned $60 for his time.

There is also a new kind of mystery shopping opportunity called Beer ID. If you are age 30 or younger your job would be to try to purchase beer and cigarettes and then record if the clerk asked for your ID. These assignments pay anywhere from $5-$30, plus you are reimbursed for any items you purchase. We know of one person who was able to earn $5000 in one month through Beer ID.

If you think you’d like to be a mystery shopper here’s a video courtesy of National Debt Relief that explains its basics.

Get a job overseas

The job market in some overseas countries is much healthier than here in the states. There are jobs outside the US where you would get your meals and accommodations free at least for a few months, along with a tax-free salary. We know of one young woman who did this and was able to pay off her student loan debts in less than two years. As it turned out she liked life abroad so much that she decided to settle down in the Bahamas.

Find a “sugar daddy”

If you’re a young woman with a huge stack of student loan debts you might consider getting a “sugar daddy.” There is a site called SeekingArrangement where women can find men willing to support them financially. There are currently 350,000 “sugar babies” on the SeekingArrangement site. About 41% are college students and say they’re using their sugar daddies as a primary or secondary way to pay for college. According to SeekingArrangment, these women receive an average of $4,200 a month, which is certainly nothing to sneeze at.

Sell your virginity or your sperm

There are actually auctions where women can sell their virginity. One woman recently netted $1 million by selling her virginity. She did this in conjunction with the Moonlight Bunny Ranch, a legal brothel in Nevada. When she was asked how her family felt about this, she said her mother was a bit disturbed but that everyone else saw it for what it was – simply a business transaction.

On the male side, you might be able to earn extra money to pay off your student loans by selling your sperm. We heard of one Californian who earned $2600 for making sperm donations over the course of a year at a California Cryobank. While we can’t promise this there probably is a sperm bank somewhere near where you live.

Get a job in the public sectorFederal Eagle

If you were to get a public sector job you could have a lot of your debt eliminated through the Public Service Student Loan Forgiveness program (PSLF). If you were to qualify for the program the remaining balances of your federal loans would be forgiven after you’ve made 120 qualifying payments on them.
To qualify for this program you would need to work full time in:

A government organization (including a federal, state, local, or tribal organization, agency, or entity; a public child or family service agency; or a tribal college or university).

Or …

A not-for-profit, tax-exempt organization under section 501(c)(3) of the Internal Revenue Code

A private, not-for-profit organization (that is not a labor union or a partisan political organization) that provides one or more of the following public services:

  • Emergency management
  • Military service
  • Public safety
  • Law enforcement
  • Public interest law services
  • Early childhood education (including licensed or regulated health care, Head Start, and state-funded pre-kindergarten)
  • Public service for individuals with disabilities and the elderly
  • Public health (including nurses, nurse practitioners, nurses in a clinical setting, and full-time professionals engaged in health care practitioner occupations and health care support occupations)
  • Public education
  • Public library services
  • School library or other school-based services

Join the French Foreign Legion

If you’re really desperate to get rid of your student loans – or away from other issues –you could join the French Foreign Legion. It literally encourages you to create a new identity and offers the opportunity to visit foreign lands. You would have to enlist for five years and would earn only about $1400 a month. But once you completed your five-year stint, you could apply for French citizenship and would have legal protection from your creditors along with very liberal state-run universal healthcare.

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