Student Loan Debt Relief: A Skeptic's Guide

Although many people are skeptical of its existence, student loan debt relief is a real thing that most borrowers are able to take advantage of. No matter a borrower’s situation, there are specific guidelines that a person should follow in order to adequately and completely explore the options. 

Step 1 – Be On Time

For the most part, any type of debt relief is only available to borrowers who have no missed payments or defaulted on their loans. In order to be considered eligible for debt relief, keep making monthly payments on time.   

Step 2 - Determine Circumstance

Depending on the type of loan that a borrower is struggling to pay back, the options for debt relief are different. A borrower needs to determine the exact type of loan that he or she has before he or she determines how to go about reducing payments. The most common options for loans are Perkins loans, Stafford loans, Federal Direct Loans, or consolidated loans. If a borrower has consolidated loans, then that borrower needs to determine the types of loans that he or she originally had and then brought together. 

Step 3 – Negotiate

Usually, depending on a borrower’s situation, the lending company will be willing to reduce interest rates. This way the overall cost of the loan remains the same, but the monthly payments decrease. Renegotiating the terms of a loan means that the amount of time that a borrower will be paying back the loan increases. If a borrower has not yet done so, consolidating loans can reduce monthly payment as well. A borrower needs to prove that his or her cash flow cannot cover the current monthly payments that are due, but that, if the monthly payments are reduced, the overall amount of money owed can be covered. Lending companies do not want borrowers to default and therefore will be open to exploring modification options with a reliable borrower.

Step 4 – Give to Get

Once a borrower determines the type of loan that he or she has, then the process of exploring options for debt relief can begin. If a borrower has Perkins loans, he or she can reduce payments by volunteering with the Peace Corps. Service with the Peace Corps can also reduce payments owed on consolidated and Federal Direct Loans up to 70%. No matter the type of loan that a borrower has, volunteering with AmeriCorps can provide someone with up to $4, 725 towards loans.   

Besides community service, borrowers can reduce payments by working in certain professions. Becoming a doctor or teacher in a specified, usually lower income, community can help reduce payments owed. Also, entering the armed forces usually results in a reduction of payments owed. 


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