According to a Boston Globe article, about 70 percent of this year’s college grads will have student loans. For the class of 2014, average student debt was just shy of $29,000. Graduates who go on to work in public service — for the government or a nonprofit organization — can qualify for loan forgiveness after 10 years of employment. You can search for more information about Student Loan Management Companies on BBB’s website.
Loan amounts have been rising for the past decade, according to the nonprofit Institute for College Access and Success. Many graduates attempt to manage their debt without knowing much about their loans, nor understanding how government loans work. Most are not aware of many available programs. 70 percent of borrowers in default could qualified for lower payments, suggesting a need for better education. Borrowers should know who their student loan servicers are and what they do. These companies administer student loan accounts on behalf of lenders, collecting payments, processing requests to modify repayment plans, and answering borrower questions. Federal student loans are serviced by just a few companies that provide service free of charge to borrowers. Watch out for companies trying to sell you loan administration services or offering loan consolidation for an annual fee. According to the article in the Boston Globe, some may be engaged in unethical and costly practices, which in some cases may violate the law.
Borrowers should also know that they have several choices beyond default or trying to pay an unaffordable monthly bill. Qualifying borrowers can pay back their loans on an extended repayment plan for as long as 25 years instead of the standard ten, with four different income-driven options based on the graduate’s loan payments and earnings. Borrowers pay from 10 to 20 percent of their discretionary income each month.
More information about all of these options is available at the Consumer Financial Protection Bureau.
For more information you can trust, visit bbb.org/evansville.