It would be no exaggeration to say that now, more than ever before, the number of students suffering under onerous education loan commitments has acquired epic proportions. Such is the level of distress among student community that almost 25 percent of them are more than a month behind on their scheduled payment. Even worse, the total number of bad loans has now swelled well over 7 million. Clearly, we have a problem at hand that needs urgent attention. This is especially true in the case of students with entrepreneurial ambitions.
Steps to mitigate your loan burden
1. Research your colleges
While you may have your favorite colleges you would dearly like to attend, we would advise you to be a little more meticulous in researching their financial assistance programs. In this respect, you can rely on the very helpful database prepared by Department of Education on colleges with abnormally high default rate.
2. Choose your repayment plan after due care
Typically, students who avail federal loan programs are, by default, slotted in a 10-year long repayment plan with the first repayment falling after six months of graduation. However, if you have for various reasons failed to secure a job, or if your present salary doesn’t allow you to honor your loan repayment commitments, or if you are involved in an entrepreneurial venture without consistent income, then you would do well to opt for one of the six other repayment options. Some of these repayment plans can significantly bring down your current loan payment obligation or defer them altogether. Make use of the Department of Education’s repayment plan calculator to make sure which plan suits your requirement best.
3. Lower your rate and principal
In the event you are enjoying a monthly income that is, at least, $1000 more than your monthly debt obligation, then you are entitled to seek a debt refinance. In other words, you can opt for a lower rate loan compared to the high rate student loan and bring your overall cost down. Similarly, if you have a little saving or extra cash that you want to use to pay up your loan quicker, then make sure it’s used to reduce your principal amount. Make sure you highlight it to your lender, through an express letter, that your money is not to be used to next month’s commitment.
4. Live frugally
The most important aspect, when you are burdened with an onerous student loan is to make sure you aren’t spending money on wasteful expenditures. While it is true that your student days are over, living frugally is a habit that will serve you over your lifetime and result in savings that are simply not possible otherwise. In any case, this is the time to stay focused on your entrepreneurial ambitions. Make use of several websites that promote frugal living through affordable rent, cheap sales and coupons, cooking at home instead of eating out, and using public transport. Most importantly, make it a habit to live on a budget.
Follow the 4 tips above diligently and you’ll discover that student loans have no business in thwarting your entrepreneurial zeal. Indeed, do not hesitate to share this link on how to stop student loans from destroying your entrepreneurial dream so that many other could benefit as well.