It is not uncommon for students to be left with more than a hundred thousand in student loans upon their graduation. While this may sound daunting, we have some top tips for you on how to manage and conquer those staggering student loans. So, read on to find out how Andrew Josuweit was able to eliminate a credit score of 470 and over $107K in student loan debt .
Rehabilitating Defaulted Student Loans
Even though a defaulted student loan may sound extremely scary, it is not actually that uncommon. In 2016, the total number of defaulted student loans increased by 14%, so you are certainly not the only one!
To manage your defaulted student loans better, you could benefit from the federal student loan rehabilitation program. Even though there are various rules that apply to this loan rehabilitation, in most cases the student is required to make nine payments over a period of ten months to restore their standing.
Increasing Your Income
When you are facing a lot of student debt, then it is vital to increase your income. Cutting costs is one thing, but there is only so much you can cut back on. Therefore, it could be a good idea to look around for some supplemental income; this could come from a website or by finding a higher paid job.
Build-Up Your Credit
Once you have sorted out any default student loans you may have, it is time to look at your overall credit. Unfortunately, when you have a lot of student loans outstanding, you probably won’t qualify for a normal credit card.
To ensure you build your credit back up over time, you will need to make sure you make your credit card payments on time too. If you don’t believe you can do so at the moment, then it is best not to focus on credit build up at that time. However, you will have to do this some time in the future.
Get a Lower Interest Rate
If you find your current interest on student loans too high, you could refinance your loans and get a lower interest rate. However, you do need a reasonable credit score to apply for refinancing, so this step should only be executed when you have built up your credit.
Moving to a More Desirable Area
Yes, this step is quite drastic, but it could save you tons in income taxes. If you live in an area where income tax is high – for example New York – you could move to another state and benefit from a lower income tax rate. By doing so, you’ll have more money to pay off your debt.
A lot of the tips above are just common sense, so you do not have to jump through hoops to get your student debt cleared. However, each step must be carefully considered and must be tested for your situation first.