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How to Get Rid of Student Loan Debt

Dena Standley | November 30, 2022

Dena Standley
Legal Expert, Paralegal
Dena Standley, BA

Dena Standley is a seasoned paralegal with more than 20 years of experience in legal research and writing, having received a certification as a Legal Assistant/Paralegal from Southern Technical College.

Edited by Hannah Locklear

Hannah Locklear
Editor at SoloSuit
Hannah Locklear, BA

Hannah Locklear is SoloSuit’s Marketing and Impact Manager. With an educational background in Linguistics, Spanish, and International Development from Brigham Young University, Hannah has also worked as a legal support specialist for several years.

Dealing with student loans can feel like this ^^

Summary: A high level of college debt can hamper your attempts to buy a home or save for retirement. To get your finances back on track, SoloSuit has seven strategies to help you get rid of your student loan debt: check your eligibility for student loan forgiveness, take advantage of income-driven repayment plans, refinance your student loans at a low rate, consolidate your student loans, reduce the principal by paying extra, consider forbearance or deferment, and declare bankrupcty.

Many students accrue debt as they pursue an education hoping for a better future. But a lot of graduates have difficulty repaying their loans. Repayment may take several years and require a consistent income flow.

The elusive American dream includes earning a college degree, but it comes at a high cost. Approximately 43 million Americans are burdened with student debt. Sadly, the debt might reach six figures for borrowers who attended graduate or professional school.

While you have forgiveness options available, there's no simple way to get rid of student loans without paying. But SoloSuit has compiled seven ways to help you eliminate student loan debt below.

President Biden’s student loan forgiveness plan

Under the Biden administration, you may qualify for up to $10,000 in student loan debt forgiveness if you make less than $125,000 annually. If you qualified for a Pell Grant during your education, that amount might double to $20,000 in debt forgiveness.

It is important to remember that numerous legal challenges have been brought against the plan, complicating and delaying the rollout. Applications for student loan debt forgiveness have been paused until the legal challenges are resolved.

Check out our student loan forgiveness 2022 guide to learn more.

And now, without further ado, here are seven ways you can get out of student debt.

1. Check your eligibility for student loan forgiveness

The federal government offers several debt forgiveness programs that may help you eliminate some or all of your federal student loans. You may qualify for the following federal programs:

Public service loan forgiveness (PSLF)

Under the PSLF program, federal student loan debt may be forgiven after ten years for public sector employees, including government and nonprofit workers. To find out if you work for a qualifying employer and generate your PSLF form, use Federal Student Aid's PSLF Help Tool.

Total and permanent disability (TPD) discharge

Disabled borrowers may qualify for total forgiveness of their student loan debt. Based on existing data from the Social Security Administration, the Department of Education automatically identifies eligible TPD beneficiaries. Additionally, you can apply for Federal Student Aid (FSA) here by providing your doctor's documentation.

Closed school discharge

Sometimes, you may not have to repay your student loan debt if you were enrolled in a school that closed while you were there or shortly after you graduated. A closed school discharge will be available only if you meet specific criteria and apply to the Education Department. Some loans automatically discharge - if this is the case, your loan servicer will notify you.

Teacher loan forgiveness

You may qualify for forgiveness of up to $17,500 if you teach full-time for five academic years in a low-income school or educational agency. This policy affects both subsidized and unsubsidized Direct Loans and Federal Stafford Loans.

Borrower defense to repayment

Your federal student loan debt may be discharged if you qualify for a "borrower defense to loan repayment," sometimes shortened to "borrower defense." This involves the school misleading you or engaging in other misconduct, violating specific state laws. Depending on your circumstances, you might even be eligible for a refund. Visit the FSA website to learn more and start your application.

2. Take advantage of income-driven repayment plans

Income-driven repayment plans calculate repayment amounts according to a percentage of your discretionary income. The payment percentage may vary depending on the plan, income, and family size.

There are four income-driven repayment plans available:

  • Pay As You Earn Repayment Plan (PAYE Plan) -10% - 20 years
  • Revised Pay As You Earn Repayment Plan (REPAYE Plan) – 10% - 20 years (undergraduate study) and 25 years (graduate or professional study)
  • Income-Contingent Repayment Plan (ICR Plan)- 20% - 25 years
  • Income-Based Repayment Plan (IBR Plan) -10% (new borrowers-20 years) and 25 years (old borrowers)

3. Refinance your student loans at a low rate

When you refinance student loans, you take out a private loan to pay off the balance of one or more loans. It's ideally a good idea to refinance to a lower interest rate, which could help you pay off debt more quickly and save you hundreds in interest charges.

You can refinance your student loans privately depending on your loan amount, repayment term, debt-to-income ratio, and credit history. An excellent credit score and a low debt-to-income ratio will qualify an applicant for lower rates than one with bad credit and high debts.

For student loan refinancing, follow these tips:

  • Build your credit score before applying
  • Consider getting a co-signer with good credit
  • Make comparisons between multiple lenders

Student loan refinancing may lead to lower interest rates and smaller payments. But there are some downsides to refinancing, like losing certain federal protections such as income-driven repayment plans, forgiveness programs, and administrative forbearance periods.

4. Consolidate your multiple student loans

If you are looking to lower your monthly payment amount or get access to federal forgiveness programs, direct consolidation loans allow you to consolidate (combine) your student loans. The Direct Loans and FFEL Program Loans qualify for consolidation under most federal student loan programs.

If you combine loans, they can't be reversed after a Direct Consolidation Loan is issued. Further, consolidated loans are considered paid off and no longer exist.

5. Reduce the principal by paying extra

In essence, you can pay the lowest amount toward your student debt without incurring late fees and other penalties by paying your student loan payment each month. Any additional payment you make on top of your monthly payment lowers your principal balance directly. As a result, you will reduce your debt and pay off your loans faster.

To ensure your additional payment goes toward the principal instead of future payments, notify your loan servicer in writing.

6. Forbearance or deferment may be an option

Forbearance and deferment may be options if you are facing short-term financial trouble. You can suspend your payments temporarily using either of these options. There are two things to consider when thinking about deferment and forbearance:

  • Interest will accrue during the deferment or forbearance period. It means your loan balance will increase, and you will have to pay more over time.

  • Deferments or forbearance will not count towards your loan forgiveness requirements if you seek forgiveness. Until you resume repayment, you will no longer be making progress toward forgiveness.

Consider paying the interest accumulated during a deferment or forbearance to avoid some of the consequences.

Here is an example:

Example: Jane has a $30,000 loan balance with a 6% interest rate. Her balance will accrue $1,800 in interest after a year of forbearance. If she defaults on the interest, the principal balance will increase from $30,000. Further capitalization will result in more interest accruing in the long run than if she had paid interest. Under most repayment plans, this will result in an increased monthly payment. With interest capitalization, Jane's monthly payment will be increased by $20 per month, and her total payment will be nearly $600 more.

7. Declare bankruptcy

You might discharge your student loan debt if you file bankruptcy, although the process can be difficult and costly. Bankruptcy also has a greater chance of forgiving private student loans than federal loans.

Only consider bankruptcy after exhausting all other options, such as income-driven repayment, forbearance, or deferment. In severe economic hardship caused by defaulted student loans, bankruptcy may be a viable option.

Remember, bankruptcy leaves a lasting mark on your credit history, making mortgage applications more challenging. If you are considering bankruptcy, seek nonprofit credit counseling and consult a bankruptcy attorney.

Respond to a debt lawsuit

If you are struggling to pay off your student loans, there is a chance you have other debts owed as well. When debt collectors come after you, SoloSuit can help you fight back to prevent a lawsuit and win in court.

Getting sued for debt is no joke. If you don’t respond within your state’s deadline, you will lose the case automatically when the court orders a default judgment against you. With a default judgment, debt collectors can garnish your wages and put liens on your property. This is where SoloSuit comes in.

You can respond to a debt lawsuit in minutes with SoloSuit’s help. All you have to do is respond to a few questions about your case, and our software will automatically generate a legal Answer document for you to file into the case.

Follow these steps while drafting and sending your Answer:

  1. Respond to each claim listed against you.
  2. Assert your affirmative defenses.
  3. File the Answer with the court, and send a copy to the opposing attorney.

Watch the video below to learn more about these three steps:

What is SoloSuit?

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You can use SoloSuit to respond to a debt lawsuit, to send letters to collectors, and even to settle a debt.

SoloSuit's Answer service is a step-by-step web-app that asks you all the necessary questions to complete your Answer. Upon completion, we'll have an attorney review your document and we'll file it for you.

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