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The Secret to Affording the Monthly Payment on $100,000+ in Federal Student Loans

Was it your dream to be a lawyer, teacher, or doctor?  Did you figure the salary you would make would be more than enough to cover the loan payments for the education only to find out that jobs in your field were scarce or low salary?

If you are, you are not alone! Student loan debt nationally is over $1 trillion and growing, with an even greater percentage of it in default.

Why So Much Loan Default?

The reason so much debt is in default is because of the huge monthly payment with which you are saddled upon graduation. Private loans at 8 to 10% with 15 to 20 year terms can take a real bite out of your budget.

Even with federal loans, if you do nothing, your loan servicer will come a'knocking with a monthly payment based on a ten year repayment term. For loan balances in six figures, the monthly payment is over $1,000! Ouch!

So What is the Secret?

But if the bulk of your debt is through federal programs like Stafford or Graduate PLUS, there is some good news. Income based plans can take into account your income, household size, and loan balance, and come up with a payment that is affordable.

Programs like Income Based Repayment (IBR) and Pay As You Earn (PAYE) can make a seemingly insurmountable problem much more manageable by lowering them to something you can afford on your salary.

How Does It Work?

With a Job. Let's say you graduated from school and got a job right away (or within your grace period) earning $50,000 per year, and you are single. Your student loans come to $120,000. As I already stated, on a regular ten year fixed plan, you would be paying over $1,000 per month. But according to the Department of Education's web site, under IBR, your payment would be just over $400!

Without a Job. But what if you don't have a job by the time the loan falls due? What then? If you are smart, while most people would duck for cover by getting a deferment or forbearance, which in most cases only increases your loan balance by capitalizing accrued interest, you would still apply for IBR, and with no income at all, and get a monthly payment of $0!

But Will It Help Me?

Now everyone's situation is different, but you should have a student loan lawyer analyze your situation and suggest different options for you to consider. If you live in southern New Jersey and are struggling with payment on federal student loan debt, I may be able to be of assistance.

Please feel free to call my office at 856-432-4113 or contact me through this site to schedule an appointment in my Woodbury office to discuss your case and look at payment options..

If you would like more information about student loans, you can also dowload my free book, I Graduated; Now What? A Guide to Dealing with Your Student Loans.

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Steven J. Richardson
Bankruptcy, Collections, Student Loan, DUI and Traffic Court attorney in Woodbury, NJ.