Student debt is problematic in wide variety of ways; not only do they often affect your ability to achieve financial solvency but there is considerable evidence pointing to the negative health effects of high levels of debt. The trick, though, lies in having the know-how to pay off student loans. Fortunately, students can rely on having dedicated people in their corner. There are government programs designed to help make large student loans more manageable as well as innovative services to assist in simplifying and optimizing student debt.
Student Start Up Plan
As part of the Start Up America initiative, the U.S. Small Business Administration has introduced the Student Start Up Plan. This is a way for young entrepreneurs to become educated on the ins-and-outs of Income-Based Repayment. Student loans can be a powerful disincentive to starting your own business, partially because of the inherent risk involved in the long-term. Even in the short-term, however, under standard repayment plans, those with high levels of student debt can’t afford to work for themselves for less money than they could earn working for an established company, no matter how much faith they have in their own project. Committed to the assertion that the U.S. very much needs young entrepreneurs, the Small Business Administration’s program is designed to inform this cohort about how to get the most out of Income-Based Repayment and how to qualify for Public Service Loan Forgiveness.
Know Before You Owe
One of the biggest problems in the student debt arena is a lack of information about how to deal with personal finance and navigate the options within financial aid. Consumer Financial Protection Bureau Director Richard Cordray has remarked: “The bottom line is that no consumer should take on a large amount of debt without understanding the costs and the risks. Too often students receive financial aid award letters that are laden with jargon, use inconsistent terms and calculations, and make it unnecessarily difficult to compare different financial aid awards side-by-side.”
In an effort to make students as informed as possible, the CFPB, as part of its widespread Know Before You Owe program and in collaboration with the Department of Education, recently released a Financial Aid Shopping Sheet. According to Cordray, the new form “gives college-bound students what they have been craving: real numbers and a format that makes sense of a huge financial undertaking that too often is confusing and daunting to borrowers. This form, which presents a model of what all financial aid award letters should be, would provide a uniform way to inform potential students of their true college costs – before they commit to a school.” Efforts are underway to make the form available to all incoming college students.
Knowing before you owe is great, but what about afterwards? There are solutions on this front too. Borrowers are in need of a student debt plan that allows them to take advantage of existing financial programs via prudent debt management. No need to go it alone, there are student aid organizations that can help with student loans by working with students to simplify their debts.