Today is all about embracing gratitude for the many gifts that fill each of our lives. On this day we remember our forefathers, who crossed the oceans to settle an unknown land, learning to live and thrive amidst the enormous uncertainty of a new world. This pioneer spirit runs deep in Americans and helps us to be as equipped to face the challenges of this modern world as the colonial settlers were two hundred years ago.
Despite high tuition rates and the many problems and inefficiencies that plague student loan culture, there are as many ways to overcome the challenges. Here are a few of the best ways to combat student debt.
President Obama’s new student loan plan, Pay-As-You-Earn, is just entering its final phase, which means borrowers are about to begin benefitting from it. Designed as a means to alleviate the debt burdens of low and middle-income borrowers of federal student loans, PAYE will lower the cap on borrowers’ discretionary income from 15% to 10%. The plan will also reduce the duration of the term required for borrowers to become eligible for loan forgiveness from 25 years to 20 years. Even though PAYE won’t come into effect until 2013, loans dating back to 2008 can benefit from the improvements retroactively.
Going hand in hand with PAYE is Income-Based Repayment. This is the government’s best option for student loan borrowers who are struggling to repay debt. On standard repayment plans, borrowers are committed to paying a set monthly rate on their student loans, but on an Income-Based Repayment plan, the monthly payment is determined based on the borrower’s discretionary income. And, as mentioned above, with PAYE Income-Based Repayment just got better. It’s also not the only federal loan repayment option that’s based on income, borrowers can check out the others, such as Income-Contingent Repayment, in order to determine which plan is best for you. Also bear in mind that it’s your right to switch repayment plans at any time.
Loan Consolidation and Optimization
One of the best ways to overcome student debt is to have a well-managed debt repayment plan. There are loads of financial opportunities to be had by doing things like taking advantage of U.S. tax breaks, getting on the right repayment plan and consolidating your student loans. Getting yourself educated about some of the ins and outs of personal finance can be of tremendous value in trying to optimize your debt, but there’s also no reason to try and do it all alone. This is a tremendously complicated area and much is to be gained by seeking help from the experts. Fortunately for borrowers, student aid organizations are there to help.