I’ve paid my fair share of student loans. I had two student loans for my undergraduate, and one whopping student loan on my graduate degree. Lump onto that the three loans for my daughter’s college education, and I’ve paid a ton of money for three college degrees.
If I could go back in time, I’d do things a lot differently, but live and learn, right?
Often times, people mistakenly believe there’s a way around paying off these loans (for example, if you become totally and permanently disabled, or if you die, your debt might, might be discharged).
[tweetthis]The only way out of student loan debt, is to pay your way out.[/tweetthis]
3 Disastrous Ways To Rid Yourself of Student Loan Debt
1. Just Not Paying
It’s hard to believe but many people have tried this tactic and failed miserably. Some mistakenly think if they don’t pay, there’s not much a lender can really do about it.
Well, that’s not true and the lender can do plenty to you.
First, there ‘s no bankruptcy option for student loan debt. If you owe it, you will always owe it. Ignoring this fact only fuels the debt to grow higher and higher in penalties and interest. Ignore it for too long and you could be paying it off for the rest of your life. Literally.
Ignore it and you’ve now begun the process of ruining your credit score which will be necessary when you try to get a mortgage or even rent an apartment. Student loan payments tend to be one of the first credit accounts new graduates have in their name. If you miss payments, you’ll slowly but surely ruin your credit score. Check out Credit.com to see where your credit currently stands and how your loans are impacting your scores.
2. Paying With Credit Cards Then Declaring Bankruptcy
Ok, whoever thought of this was seriously kidding him/herself.
First, rates on credit cards are significantly higher than what you’d pay on a traditional student loan.
Try to declare bankruptcy on your credit cards with part of that debt being student loans and the bankruptcy court will see right through your feeble scheme. You’ll still owe the debt and you’ll have 7 years of credit disaster to fix.
3. Using Your Homes Equity To Pay Off the Loans
Here’s another really bad idea, not because it won’t work but because you’ve just tied this debt to your home, probably your most significant asset.
Missing a student loan payment is bad enough, but miss a mortgage payment and the consequences of foreclosure are devastating.
Don’t tie up your single most important asset with your student loan.
What to do if you’re having difficulty making your payments.
There are several options out there if you’re having trouble meeting your student loan debt obligation.
Income-Based Repayment, Pay as you Earn, and Income-Contingent Repayment are just a few of the options that legitimately help you pay off the debt. After making Income-Contingent payments for a period of time, you would quality for relief or public service forgiveness if you work for a qualified employer.
Remember, you’re not alone. Thousands of graduates are in the same boat.
There’s no Get Out of Debt Free card when paying off student loans. Keep the lines of communication open with lenders that are knowledgeable about all of the solutions out there.