Pay Off College Loans

If the thought of having to pay off college loans is intimidating, here is some information to consider. First of all, if a student hasn't applied for loans yet, he or she has several options. Even if the student has not been offered scholarships, an Internet search can yield a list of places to get money for obtaining a college education. These include scholarship opportunities and gifts from specialized private organizations for educational use. These options are the best, for the money does not have to be repaid.

It is true that the cost of college is prohibitively high these days. However, if a person is determined to get further education and improve the outlook for future job opportunities, he or she need not despair that having to pay off college loans will prevent someone from attaining these goals. In fact, it is nearly always possible to do so. Compromises may have to be made concerning the way this is accomplished, yet the goal is attainable, even for those with limited finances. Consider choices which can enable the student to succeed. For example, one may have dreamed of attending a certain prestigious institution of higher learning. Instead, one may have to attend a community college for a year or two in order to obtain needed credits at lower expense. Later, perhaps for the junior and senior years of college, the student may transfer credits earned to the college of choice and emerge with a diploma from the institution he or she had originally planned on attending. This option will take planning in order to assure that classes will be transferable. It is wise to deal with these matters far ahead of time, so that time and money are not wasted on duplicate classes. Yet this is one way of attaining goals without accumulating a mountain of debt.

Perhaps it is worthwhile to mention that, in general, potential employers are not impressed only with a candidate who has a degree from a well-known university. For certain fields of endeavor this may still be an important factor. However, most employers want to see that a potential employee has had training in a field which is at least related to the current job situation. The institution at which this has been accomplished is usually not as important as having the needed background. In some cases, work or volunteer experience in the field is just as important and desirable as college training. Also, one other factor which could be involved in employers requiring a college degree of their employees is the fact that this attainment shows that the person has a certain amount of discipline and perseverance -- in a word, the maturity -- which will be needed for the job at hand. Some missions organizations require candidates to pay off college loans before going to the field.

Some lenders offer incentives for students to pay off college loans. This may include a rate reduction for those who choose to have payments deducted electronically or who have managed to make payments on time. Sometimes certain fees are waived, the principal is reduced or cash refunded as a bonus for timely payment. However, lately certain changes have become visible in the student loan niche of the lending market. These loans are guaranteed by the government, but financed by individual banks. Stricter guidelines and regulations have caused some banks to discontinue offering some or all of their 'bonuses' to student borrowers. Because a bank may find it is not profitable enough to issue student loans under the new regulations, some have discontinued federal student loans altogether.

If a borrower already has a student loan, but is having difficulty paying it off, there are still options. The borrower can contact the present lender to speak about restructuring present loans to a more manageable payment amount. Although the borrower will pay more overall in interest costs, this lower payment may help in a crisis situation until a better solution can be arranged. Students can obtain a federal consolidation loan, although these may have certain new restrictions. The loans have a fixed interest rate, and the length of the repayment may be extended, which lowers the monthly payment amount. Other lending institutions may offer their own student loan programs. With any loan, be sure to read all of the terms carefully before signing. Check to see if there is a penalty if the borrower wants to pay off college loans early, or if the originally lower payment will balloon after a certain period of time into a sum which is likely to be unmanageable.

Defaulting on a federal loan can have some undesirable consequences. There may be the legal action and collection charges (sometimes including attorney fees) which are assessed. Wages may be garnished to pay off college loans. A person in default will not be eligible for tax refunds, further loan deferments or other federal student programs. Negative credit reports to credit bureaus can also have a paralyzing effect on possible future plans, such as the purchase of a house. No wonder, then, that Paul in Romans 13:8 urges the Christians to Owe no man any thing, but to love one another; for he that loveth another hath fulfilled the law.

Instead, try to arrange a loan with reasonable payments based not on fantasy plans but on realistic considerations of what can be repaid. Some student loan programs have certain deferments for those who are going on to graduate school, or who can not find a full-time job after graduation. Loan consolidation may be a consideration for some students, although care must be taken to pay off college loans before one accrues further debt. Some employers offer to pay off college loans as a recruitment bonus. Certain organizations will pay teacher's educational costs in return for the promise of teaching in low-income areas for a period of time. Also, if one meets the income requirements, a portion of the interest paid on higher education loans may be tax deductible. Check with your accountant about this and other programs which may reduce the tax burden.

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