Paying back your student loans can be an overwhelming process to navigate. To make things harder, there is no shortage of student loan repayment misinformation and myths floating around that can easily result in costly mistakes.
Often, speculation about student loans prevents borrowers from reaching out for help when they need assistance. If you are struggling to manage your student loan debt, consider reaching out to a skilled student loan debt lawyer. Outlined below is a look at some common myths about student loan debt and the truth of each.
Myth #1: Universities and Colleges Can’t Help with Student Loans
When it comes to student loans, one of the most overlooked resources is your school’s financial aid office. While you’re in school, the financial aid office can help answer questions you have about your scholarship or award and make adjustments to your package if your financial situation changes. They’re also a great resource for gaining insight into the terms of your student loan.
After you graduate, the financial aid office can help you start and navigate the repayment process. Not only can they help you locate your loan servicer, but they can also help you complete any required paperwork.
Myth #2: There’s Nothing You Can Do If You Can’t Afford the Monthly Payment
The misconception that an inability to afford monthly payments means you might as well do nothing keeps many graduates from getting started in the repayment process. This is such a big mistake. It’s not only incorrect but also causes many borrowers to become delinquent on their loan or, even worse, default on their loan.
If you are struggling to make your monthly payment, you should reach out to your lender to figure out a repayment plan that works for your situation. There are many ways you can restructure your loan term to make the payments more manageable. Graduated, extended, and income-driven repayment plans are a couple of options for changing your loan term that make the payments more affordable.
Myth #3: I’ll Never Be Able to Pay Off My Student Loans
The average loan repayment term is ten years, which can feel like a lifetime to someone just graduating from college. In the beginning, it can be easy to get discouraged, as it will take a while to make a sizable dent in your loan balance. However, don’t let this discourage you from continuing with your monthly payments. Over time, your monthly payment will stop going toward interest and will be applied to your principal balance.
Myth #4: The Best Way to Manage My Student Loans Is to Consolidate Them into One Loan
Whether or not consolidation is the best strategy for managing your student loans will depend on the type of loans you have. If you have federal student loans, you might consider combining your loans into a direct consolidation loan. This will take all your monthly payments and combine them into one, making payments easier to deal with.
It’s important to note that you cannot combine federal loans with private loans into a federal direct consolidation loan. Additionally, if you consolidate your loans, you may lose any benefits from your original loans, and it’s likely that your new interest rate will be an average of all the rates on your current loans, which may result in accruing more interest.
Myth #5: You Have to Pay to Change Your Repayment Plan
This is another common myth that prevents borrowers from restructuring their payment plan to make payments more manageable. In reality, you can change your repayment plan as much as you like, and there is no fee for doing so. While there is no fee for changing your plan, be aware that a new plan could affect the total amount you are expected to pay.
The standard repayment period for federal student loans is ten years, which is normally the fastest and cheapest way to repay your debt. When you stick to a ten-year plan, you’ll pay the least in interest and therefore pay the least overall compared to other plans. However, in some cases, the monthly payments on a ten-year plan are too expensive, and restructuring will be necessary to make the payments more affordable.
Contact a Skilled Arizona Student Debt Lawyer
Taking the steps to create a realistic repayment plan for your student loans can be overwhelming. However, getting on top of the situation in a timely manner is the best way to prevent going into default and damaging your credit score. If you are struggling to figure out the best repayment plan for your situation, work with a skilled student loan debt lawyer.
At McCarthy Law, our attorneys are dedicated to helping students navigate the complexities of the student loan system. Under our student loan debt settlement program, our licensed attorneys negotiate with lenders to ensure our clients pay only a fraction of their original loan balance. To schedule a consultation with one of our skilled student loan settlement attorneys, call (855) 976-5777 or fill out our online contact form.