Whilst attending higher education improves career prospects, millions of graduates are left struggling with college loan debt that they can ill afford to repay. Given that most debt relief programs are not applicable, paying off student loans becomes a priority.
Paying Off Student Loans
Whilst there are some ways of achieving debt forgiveness for students, the majority can only clear college loan debt gradually over time. This generally involves finding ways to make extra cash in order to increase monthly repayments and reducing interest rate payments by consolidating student loans.
Debt Forgiveness for Students
- Department of Health and Human Services. Up to $35,000 could be repaid each year by the National Institute of Health’s NIH Loan Repayment Program for those who conduct clinical medical research. Those with relevant educational training to perform medical research stand to benefit.
- Law Schools. There are a number of Law School Loan Repayment Assistance Programs (LRAP) providing financial assistance to legal graduates who assist the public sector. Equal Justice Works conducted a survey of 133 Law Schools and 89 reported offering an LRAP.
- American Federation of Teachers. There are a number of programs offering debt forgiveness for students in return for providing support and assistance to the public. AFT.org has a full breakdown of all the different programs provided in each state that can be used to pay off student debt.
- Americorps. Those able to offer a one year commitment will receive a salary of $7,400 and an award of $4,725 upon completion of the placement. College loan debt can be deferred until the completion of the program. There are currently up to 75,000 volunteer positions available.
Consolidating Student Loans
Paying off student loans leads many graduates to turn to debt consolidation services. Whilst a consolidation loan can simplify finances, the primary objective is to achieve a lower interest rate. Although extending the term can improve affordability, it also increases the cumulative interest paid.
Consolidating student loans is typically achieved through a private lender. Rates can vary considerably so it is important to use a comparison service, such as that provided by American Education Services, in order to identify the most favorable deal. College loan debt interest rates will often be reduced by lenders provided that repayments are made punctually for the first six months.
Ways to Pay Off Student Loans
- Freelance writing. It is possible to earn extra cash to clear college loan debt by earning either/or up-front payments or royalties by writing for sites, such as The Examiner. Others choose to set up their own website or blog.
- Rent out a driveway. Make several hundred dollars a month renting out a private driveway when it isn’t being used. There are individuals prepared to pay hundreds of dollars a month for this facility.
- Pet walking. Individuals can earn as much as $10 per hour by walking dogs in their spare time. Others can earn some additional money by operating a pet sitting service.
- Registered childminder. Subject to complying with a Criminal Records Bureau (CRB) check, it is possible to make extra money by working as a childminder.
- Sell unwanted items. Pay off student loans by selling unwanted items on eBay or at a garage sale. Whilst this won’t clear all the money owed, it will help to make some inroads into it.
IRS Tax Breaks
The current tax law allows those with college loan debt to receive up to $2,500 of tax relief on interest payments each year. Those who meet the income requirements will need to complete tax form 1040A (line 18) or 1040 (line 33). Married couples must file jointly in order to benefit from this tax break.