6 Steps to Reducing Your Student Loan Costs

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I got my loan in 1999 and since its federal it can't be refinanced. Everybody always says to get an education than they don't help with common sense legislation. I never understood why we can re-fi a stupid car, but we can't re-fi an investment like education. Someone is greasing their sweaty paws on this one.

Manny Schlomo of PA 9:06PM March 03, 2011

Please don't let this article change the course of your life! There are tons of scholarships and grants that you, as a "top of your class" student can do. You just need to do some research through legitimate avenues. Go apply to the top schools! See what they will offer you with their financial aid award! Medicine? Are you kidding me? There are hospitals and schools that NEED students like you. The government forgives loans if you spend the alloted amount of time in the underserved areas of the U.S.
As a financial aid professional, I would jump at the chance to help someone like you. Unfortunately, I'm not at a school that offers pre-med or medical degrees.
Good luck and chase ALL of your dreams!!!!

Debby of CA 1:15PM April 28, 2010

I read this article and thought that it was good for students considering borrowing for college. It wasn't designed to address the needs of past borrowers.
Borrowers with problems repaying their student loans have options. Some private lenders as well as the federal government will grant a student a deferment/orbearance during times of unemployment or disability. Under the federal Stafford and Graduate PLUS loan programs, a student may receive up to 3 years of deferment for unemployment or working <30 hours per week. A student with over $30,000 in federal loans may apply for an extended repayment period of 25 years, reducing monthly payments. Sometimes this payment can be less than the Income-Based Repayment, depending upon the borrower's income. With the extended repayment plan, a borrower can also get a graduated repayment so that s/he pays interest only for the first two years, and graduates upward thereafter. Income-based repayment for someone who is unemployed or working only part-time after unemployment deferments are exhausted may be $0 monthly.
Private loan debt is tougher, but if a borrower has any ability to repay at all, this is the debt s/he should try to retire first. Most private loans have variable interest rates based on an index such as prime or LIBOR which are very low right now. If a borrower can reduce or temporarily eliminate federal loan payments using IBR, extended repayment, an unemployment or economic hardship deferment or a consolidation loan (practical only for people with over $60,000 in federal loans at this point) and put any funds available toward the private loan, s/he could pay down the private loan while rates are low and avoid potentially significant increases in monthly payments down the road.
For those who are really stuck with private loans, be aware that there are bills in Congress which would make private student loans dismissable in bankruptcy. These are being supported by the National Association of Student Financial Aid Administrators and other education groups. If you feel strongly about this issue, contact your US representative and senators.
Federal loans are almost never dismissable in bankruptcy & never have been, as taxpayer $ are involved. If all a person's other debts are dismissed, the feeling is that the borrower should be able to repay debts to the public who supported him/her.
And borrowers have to take some responsibility. You knew it was a loan. After 30+ years in financial aid, I've seen it all-lying about living off campus when students were really at home to get more loans. Borrowing more than needed to buy non-essentials, like beer & spring break. Taking the minimum credits to get full-time aid & borrowing for 5,6,7+ yrs. to get a BA. Turning down that work-study job! Not all students, but plenty, abused the system & got in trouble. If you really want help, see your FA advisor, take any job, make a budget & stick to it. The Lord (&govt) helps those who help themselves!

aidofficer of TX 10:57AM April 28, 2010

You forgot to warn the students that should they take out student loans, and then, oh I don't know, maybe the economhy sucks, there are no jobs for two to five years from graduation, they must take 100% of the risk because federally gauranteed loans, and all student loans right now can not be discharged in bankruptcy, which also means no renegotiation. Never mind that most economist feel that allowing businesses to restructure and elimate bad debt is good for allowing quick recovery of the economy after bad times, and hence, by extension certainly the same is true of the average consumer. Still Students, people who borrow money to better themselfs to contribute more to the economy in society, who sacrifice countless sleepless nights, and make countless other sacrifices to maybe get a little ahead, are nearly the only consumers that can not EVER get a second chance if the effort goes wrong.

WI Will of WI 11:29PM April 27, 2010

After reading some of your suggestions it is definitely given me a solution. I just wont go to a university even if I really wanted to be a doctor.
Its beyond my reach and from what I can tell you do not offer many option if I am unable to get an accurate "future" earnings capacity in a career I would have chosen.
Because of the current economy and many of my friends family who are struggling with their student loans. I guess even though I graduated a head of my class I will attend a community college and try to get a part time job. I called Sallie Mae and they wanted my parent to co-sign but they cant and I will not let them be financially responsible is something happens to me. I am currently rethinking my life now, and a lot of my dreams. Gosh this sucks!

christina lee rayo of MD 6:52PM April 27, 2010

Try to find a school that is less expensive?
Try not to borrow to live for school?
Charities?
The wealthiest nation in the world needs to go to charities to educate its citizens? The same citizens that pay the bill for war they didn't want, banks that "needed" to be bailed out? All while accruing a debt that can't be paid off for the next 30 years?
Perhaps you should mention there is a cap on what you can borrow, and when you reach that cap, whether you are finished completing your degree or NOT, you will be forced to withdraw from school and still pay the debt of 6 figures?
How about using your star power Miss Kim Clark and figuring out a way to help this woman, www.alleducationmatters.com get the word out about what is really happening?
The "responsible" debtors are busy "pinching pennies" to get an education for a taxpayer based system that they are paying for already?
WAKE UP.

Peter Duffy of CA 12:16PM April 27, 2010

What exactly is the purpose of this article? It reposts old advice and deals only with Federal student loans while conveniently side-stepping private student loans with the blanket recommendation to 'avoid them"!
There is a student loan crisis happening right now, and it's affecting countless young professionals (and would-be professionals) who are burdened by unconscionable amounts of private student loan debt with no end in sight!
Why aren't you advocating the extension of the IBR to private student loans? Or advocating for the return of consumer protections to loans (such as discharge through bankruptcy)?
As a responsible debtor, I want to pay back my loans, and am currently doing so. However, I also want to be able to have some financial breathing room should I fall ill or lose my job! Paying 50% of my salary to private student loans (oh right, I should have 'avoided' them somehow!) is ridiculous!

Richard Saunders of CT 11:09AM April 27, 2010

The best way to reduce your student loans is to have a JOB!!
Most students do not and will not be able to get one because of well...we know why?? but yet Sallie Mae and all other lenders are just loaning money to students that will incur unsustainable debt.
The students who do have federal loans and are eligible for the Income Based Repyment plans already know this, how redundant can you get!
All of your suggestions are so coated with sugar,the article is just another buffer to solve a growing and catastrophic solution for the current higher education issues in this country.
You offer nothing in the article, absolutely nothing that is comforting to those who ARE responsible and want to pay back their loans. Step up to the plate and contribute to this dilemma by advocating more serious regulations.
In fact Ive seen these same solutions over and over again in booklets and other sites.
Its too bad you waste our time with recopied type, non inventive methods that will truly help the students.
I suggest you stick to articles you can really write or contribute too. Shame on you!

wendy scalzo of CA 11:01AM April 27, 2010