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Back to School: Navigating Student Loans and Financial Burden

Millions of Americans are once again repaying their federal student loans, with monthly payments averaging hundreds of dollars. For many, this means making significant sacrifices, such as cutting expenses, taking on additional work, and seeking ways to reduce their monthly payments.

Struggling to Make Ends Meet

Megan McClelland, 38, is one such borrower. As a counselor at Petaluma High School in California, she works multiple jobs to supplement her income, including shifts at a catering company and a winery. With her main job and other income sources, she was able to pay off her car loan and save for the first time during the years when payments were suspended due to the pandemic. However, the restart of repayments means she now has to reallocate or earn an additional $270 per month to tackle her $275 monthly student loan payment.

"It had been a huge relief the past few years to not have that financial burden," she said. "In the next months, I’m looking to see where I can scale back in my budget. Probably less going out to eat, and more picking up side gigs."

Rising Debt and Financial Stress

Justin Cole, 35, of Little Rock, Arkansas, is another borrower struggling to make ends meet. He received an estimated $166 monthly payment on his roughly $19,000 in loans from paying for college more than 10 years ago. While he’s already in a "mountain of debt" from a car accident early in the pandemic, he hopes to use his upcoming raise to get his credit score up and start saving.

"If those loans were forgiven, I could finally work on getting my credit up and actually saving money for once," he said. "If they were forgiven out of the blue, I’d be ecstatic."

Supreme Court Rejects Student Loan Forgiveness Plan

Unfortunately, the Supreme Court has rejected President Joe Biden’s administration’s plan to wipe away $400 billion in student loan debt. However, there are still several avenues for relief available to borrowers, including the Public Service Loan Forgiveness program, which is still open to many with student debt.

Getting Student Loan Relief or Forgiveness

How to get student loan relief or forgiveness:

• The Public Service Loan Forgiveness program is one option, but it’s not the only one.
• After the original plan was struck down by the Supreme Court, the White House has said it will use the Higher Education Act to bring cancellation to more borrowers. The plan is currently undergoing a process known as "negotiated rule-making" to determine the details.
• Other sources of relief include false certification, borrower defense, closed school, total/permanent disability discharges, and alternate repayment programs like income-driven repayment.

Counseling High School Students

As a counselor herself, McClelland now spends a lot of time counseling high school students on how to avoid taking on burdensome loans. "I had no financial guidance when I was younger, from my own parents or from school," she said. "I didn’t ever understand the long-term impact."

Conclusion

For many students, taking on student loans can be a necessary step to further their education and achieve their goals. However, the financial burden of repayment can be significant, and it’s essential for students to have access to resources and guidance to help them navigate this process. By understanding their options and seeking help when needed, students can better manage their debt and achieve financial stability.

Frequently Asked Questions (FAQs)

• What is the Public Service Loan Forgiveness program?
  The Public Service Loan Forgiveness program is a program that forgives the remaining balance on certain federal student loans after 120 qualifying payments have been made. To be eligible, borrowers must work in a qualifying public service job and make payments on their loans for at least 10 years.

• How can I apply for student loan forgiveness?
  Borrowers can apply for student loan forgiveness through the relevant program for which they are eligible, such as the Public Service Loan Forgiveness program or the Borrower Defense to Repayment program.

• How can I negotiate a settlement with my student loan servicer?
  Borrowers can negotiate a settlement with their student loan servicer by contacting them directly to discuss their financial situation and explore options for reducing their debt.

• What other resources are available for student loan borrowers?
  Other resources available to student loan borrowers include income-driven repayment plans, total and permanent disability discharges, and closed school discharges. Additionally, borrowers can consider seeking professionals, such as financial advisors, to help them navigate the process.

Author: fortune.com

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