With college costs spiraling ever-upward, it’s no wonder that one in five adult Americans has student loan debt totaling nearly $1.6 trillion,1 with more than 2.5 million people who owe $100,000 or more.1 That debt can make it difficult to qualify for a loan or other forms of financing to move forward on your life path. Thankfully, there are options for managing the debt and getting your financial life back on solid ground.
Understanding the impact of student loan debt When making regular student loan payments, you have less money to set aside for other goals, like a home down payment, retirement or starting a family. Additionally, if you have high debt compared to your income, you may find it difficult to qualify for other financing, such as a car loan, a mortgage or credit cards.
Landlords and service providers (like cell phone and internet services) may also consider your loan payments when deciding whether you’ll be able to make your monthly payments to them. And if you find you can’t keep up with your student loan payments and default, that information will stay in your credit history for up to seven years.
Check the interest rate, the payoff timeline, the minimum monthly payment and any potential fees, such as for late payments or early payoffspare these same points when exploring solutions – like the five below – to make sure you’re moving into a better deal.
Income-driven repayment plans for federal student loans base your monthly payment on your income. Payments could be $0 if you don’t have a job, and your balance could be forgiven if you consistently make payments for 20 to 25 years. 2